A startup is a new way of doing business that makes money by selling unique goods and services and meeting market needs. India is the sixth most active place in the world for new businesses, with 3,100 active companies in the last three to four years.
In India, more businesses are willing to take risks and risk losing money. A report says that over 94% of businesses fail because they don’t have enough money. Businesses often have trouble getting money. Saurav Karukar’s SASLAB Technologies went out of business in 2014 because it ran out of money. Without consistent funding, it’s hard for a business to bring in money.
How do I get money for my new business? Every business owner has to answer this question. How much money the company has depends on what it does and how it is categorized. Some business owners have unique ideas, but getting money for their risky businesses is hard. In India, there are many ways to get money for a business. This article will help you decide which way to get money for your business is best.
Best Ways for New Businesses to Get Money
Bootstrapping
You were bootstrapping means self-funding your business if you are a new business owner without a loan from a bank or other source of money. Also, one way to start getting money for the business is to borrow from family and friends.
Low-interest loans are available, and you may stay silent during the process. At the mature stage of a company’s growth, investors see this as a benefit for businesses with few needs. But it’s not a good idea for businesses that need money quickly.
Crowdfunding
Crowdfunding is a way to get money from a large number of people.
Public money is one way your business is getting more and more money. With this strategy, entrepreneurs can tell people who aren’t in business about their business ideas and teach them about their company, how it makes money, how much seed money it needs, and where it will be invested.
The audience then responds to the entrepreneur’s idea by giving money or placing orders ahead of time. This kind of funding helps him build a group of willing people to invest in and back his idea. This gives the company a boost right away. This gets venture capitalists interested in giving your company money, depending on how well the campaign does and how risky it is.
Risk Capitals
If you like to gamble, this is where you can take big business risks. Venture capital is money managed by professionals and put into businesses with a lot of potentials. They are the people who will put money into your business through private equity. They also give experience, guidance, and a way to find stability.
This means that you should choose this option if your business is already making money and is in its early stages of growth. A company also loses them when it goes public or is bought. Lastly, they only invest in companies whose products have three to five years of life cycles because they expect to get their money back in five years.
Investors
Angel investors are rich people willing to invest money into a new business. This kind of funding is good for businesses starting, but it could affect their income. Angel investors are rich people willing to put money into your business in exchange for a share of the company’s private equity.
Also, they are more likely to invest more in your business if it gives them good returns. The problem is when angel investors put in less money than venture capitalists, who put in more money in the early stages of a company. Even angel investors have flaws in giving money and helping you grow your business. Indian Angel Network, Mumbai Angels, and other groups like them are angel investors in India.
Incubators
For first-time startup investments, incubators and accelerators are two more options. They are short-term programs that help businesses grow and develop by connecting them with more mentors and connections. Incubators are programs that give people a place to work and the tools they need in exchange for up to a 20% investment.
On the other hand, accelerators are short-term programs that give 2–10 percent of your business a small amount of initial funding and a large network of mentors. These programs are like the caring people who raised you. Amity Innovation Incubator and Angel Prime are both well-known in India.
Govt. Programs
Also, the government helps and encourages people to start their businesses. In the Union Budget for 2014-15, the Indian government said it would give 10 billion rupees to new businesses. The government has set up more programs, like the Bank of Concepts and Innovations, which will help people develop new product ideas.
Another government program lets you borrow money without giving anything in return is the Credit Guarantee Fund Trust for Micro and Small Enterprises. With 20 trillion rupees, the government set up MUDRA to give money to businesses that meet certain criteria. Also, institutions are more forgiving of low-interest rates than the market is. When applying for a government loan, it’s important to be aware.
Individuals With High Net Worth
Last but not least, High Net Worth People are people who have enough money to help your business. These people already have their businesses and want to invest in yours for one to three years. They think that the investment will double or triple after this time. They put their money into businesses that can do well in the market and make money quickly. The first benefit of alternative financing is that your investment can be made to fit your needs. Last, people who have more money charge less.
Banks
When making a business plan, this is often the first choice. Banks give loans to business owners who qualify and can implement a full business plan. Before giving a loan, the bank looks at the company’s idea, the value of its inventory, the project report, and other papers. Now, the process is simple, and there are no strings attached.
Banks provide seven to eight different forms of SME loans. The only important thing is getting the money back quickly. There are benefits to bank financing, such as keeping the profit or loss and using the right method and structure of the bank. Also, they are available around the clock and cost less than venture capitalists (13-17 percent ). You need a plan to stick to get the money you need.
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