Less than 1% of startups in India raise outside capital to support the launch or growth of their business. In spite of all the media hoopla about venture capital or unicorns, the marked majority of startups today raise funding through other sources. We create this list of source for the first time entrepreneur who is looking at innovative ways to fund a startup.
Here, we will look at some ways to raise funds outside equity investors to fund your business:
There is no better way to fund your business than self funding with your own revenues. Ofcourse, not all businesses are able to do that given their business model. Some of the largest technology companies in India were built this way. One of the great examples is Zoho, a software company from Chennai whose private market valuation exceeds a billion dollars now. Talk about a non-funded startup becoming a unicorn.
If you are working on a patentable product or service, especially in domains like pharma, healthcare products, and agri-business, there are many schemes of government funding for startups in India and international grants to support you. We advise that you reach out to subject matter experts in your field of business to explore the best grant opportunities. Below are some prominent private grants to support your startup
- Center for International Private Enterprise
- Biotechnology Ignition Grant (BIG) Scheme
- Small Business Innovation Research Initiative
- Biotechnology Industry Partnership Programme
Startup India Benefits & Startup India Loan scheme:
The startup India scheme launched by the Indian central government is expected to come up with a lot of schemes for loans and funding to help young entrepreneurs. Please check back on the Startup India platform for further updates as new schemes are put in place.
Some of the best accelerators in the world not only provide you the technical and advisory infrastructure, but also with some basic funding to get your company to the next level. Below are some accelerators that have been successful in the past:
Startup competitions & Hackathons:
You can attend hackathons and business plan competitions to pitch your business and get equity free funding towards your startup. Some popular business plan competitions are listed below:
If you’re building an innovative tech product with consumer reach, the best way to fund your product development and production is through crowdfunding websites. Crowdfunding not only provides funding, but more importantly helps you validate your product and creates a viral marketing phenomenon. In 2012, a little known VR manufacturer took to Kickstarter to fund its production. 2 years later, in 2014, that little VR company, Oculus sold for $2.3 Billion to Facebook. Here are some of the prominent crowdfunding websites to use.
Friends and Family:
Many startups and small businesses are not able to raise money externally with a business plan. Your family and friends might have conviction in your ability to believe in your vision. You could ask such family and friends to support your vision by pitching some money in your startup for equity. Since startups are tough nuts to crack, it is better to help your family and friends with the risks involved. Never ask your family and friends to put in money that they cannot afford to lose.
SME Working capital collateral free loans:
Many Indian banks and NBFC’s today provide loans to fund working capital needs. So, if you are an SME with finance needs for working capital, here are some platforms to think about:
Startup business loans:
It is hard to get unsecured business loans for first-time entrepreneurs. But, many of the PSU banks do take applications and make considerations for the same. It is easier to get a business loan with a business plan if there is a collateral attached to it.
Anish is the co-founder of FinTown, a Hyderabad based startup that provides objective financial guidance and tools to help people make better financial decisions. Before FinTown, Anish worked in various finance roles at Dell and SAS