Tag: capital

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Startup

Start-Up Funding: 5 Sources that Provide Quick & Easy Funds

5 Sources that Provide Quick & Easy Funds to Start-Ups| Representational Image (Photo Credits: Pixabay)
Representational Image | (Photo Credits: Pixabay)

Funds are the lifeline of any enterprise. For a firm to start, succeed and sustain, consistent and adequate funding is of utmost importance. Without regular flow of finance, all the other operations of the businesses including production, marketing, and selling among others become stagnant. Especially, in the present business environment which is fast paced, dynamic and highly volatile a secured stream of financial resources is important to defend the start-up against the harsh competition and market shocks. Narendra Modi Govt Clears Payments of Over Rs 6,800 Crore Owed to MSMEs Over Past 3 Months.

As the start-up ecosystem bloomed in India, it has become easier for young entrepreneurs to procure funds on lenient terms of repayment. The central government has also through its Start-Up India initiative, opened funding avenues for start-ups. Here are five options a start-up owner has to avail easy and regular funding –

Venture Capitalists

One readily available option for start-ups to avail funds is through venture capitalists. A venture capitalist is a private equity investor which provides seed capital to start-ups exhibiting potential of high growth in exchange for an equity stake in the firm. It provides funds at early, growth and later stages of business cycles. Apart from the funds, venture capitalists also provide expertise and monitoring of the business operation of the start-ups. Mostly, VCs invest in equity and once the business releases its IPO or is subscribed, they exit.

Angle Investors

An angel investor is an individual with high-net worth and surplus financial resources, who provides funding to small start-ups or entrepreneurs with high-yielding business plans to earn huge revenues from the investment. It is also known as a private investor, seed investor or angel fund. Though angel investors usually have higher return expectations and offer lesser investment amounts, they can prove be highly beneficial of start-ups in their early stages or during expansion. Finance Ministry Sanctions Rs 1.61 Lakh Crore Worth of Bank Loans to MSMEs Under ECLGS to Battle COVID-19 Pandemic.

Business Accelerators and Incubators

Various investment and asset management firms work as business incubators and accelerators for other enterprises. While a start-up looking for seed capital or early stage investment needs to look for a business incubator, they ‘incubate’ potential business plans with a hope of turning them into successful enterprises. A business accelerator comes into picture when an already existing firm looks for expansion or diversification  and need money for the same, it ‘accelerate’ the business.

Banks and NBFCs

Banks and Non-Banking Financial Companies (NBFCs) also provide quick loans to start-up owners at easy terms and conditions. However, these institutes consider more factors other than growth potential before offering the loan. They may even ask for a collateral security or a guarantor. The rates of interest are higher than the other funding alternatives. A start-up owner can apply for a term loan to buy fixed asset or do construction or working capital loans to meet day to day administrative and functioning requirements.

Crowdfunding

Sourcing capital through crowdfunding has garnered lot of attention and popularity in recent times. It does not require any organised institute; the founder raises funds from more than one person at the same time. In crowding funding, more than one investor is involved. These investors offer a fixed amount of funding depending on several factors including his budget, in return of regular and high dividends. One can gather funds from family, friends and co-entrepreneurs that believe in the start-up potential.

It is crucial that the start-up owners are aware about all the funding alternatives available to them. They should carefully analyse all the terms and conditions of procurement of funds and make informed choice. Regular and low cost financial resources keep the start-ups afloat.

 

 

 

 

 

Categories
Startup

India to Have Around 62,000 Startups, Including 100 Unicorns by 2025, Despite COVID-19 Blow, Says Report

Startup
Startup

Bangalore, October 15: Businesses have been hugely hit by the coronavirus pandemic. However, here comes a piece of positive news where it is expected that India is expected to be home to 60,000-62,000 startups, including 100 unicorns, by 2025, despite the COVID-19 blow, according to a report jointly prepared by TiE- Delhi, a not-for-profit promoting entrepreneurship, and Zinnov, a global management and strategy consultancy.

The report mentions that there has been a dip in overall funding by 50 percent during the lockdown, compared to pre-covid levels, while around 40 percent startups were negatively impacted. Four Indian startups- Nykaa, Unacademy, Postman and Razorpay-emerged as unicorns while the pandemic was at its peak. The report predicts that India is on track to having at least eight new unicorns in 2020, on a par with the 2019 numbers, taking the total number of Indian unicorns to 33.

Accoridng to another report conducted by the same group, it was found out that due to the pandemic, 15 percent of the startups have already halted their operations. In addition to this, 44 per cent of start-ups have cash runway for less than 6 months, 41 per cent of startups have been impacted negatively while 52 per cent are struggling to raise capital.

 

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Business motivation

What Are The Best Sources Of Credit For Business Startups?

It takes a village to raise a child! Similarly, it takes you a well thought out research, determination, hard work, and some good sources to gather capital to turn your dream venture into reality! Where the entrepreneur is all thrilled and excited by the mere imagination of their business coming into existence, they are equally stressed about the venture and the capital it would require for the respective business to survive and thrive in the market.

 

Considering how important and unavoidable it is to raise the capital for your business, it will be a great idea for all the entrepreneurs and wantrepreneurs to conduct detailed research on how and from where they can arrange the finances. With the help of this article, we are going to introduce you to some great options that you could consider while arranging the capital.

 

Venture Capitalists

One of the major sources of investment, venture capitalists are the groups that are known to buy equity in a start-up in exchange for the capital they provide. However, it is important to keep in mind that venture capitalists do not really entertain all start-ups. The only startups that are backed by venture capitalists are those that have tremendous growth potential and are driven by technology. If venture capitalists identify and acknowledge the potential of a startup, they will provide the capital as well as the skills and strategies that the entrepreneur lacks to grow further.

 

Bank loans

This is the old classic that could never go out of trend. Banks, since ages, have been giving out business loans to startups. It is certainly the best and most highly used option for the MSMEs to gather funds for their business ventures. In case you are a small or a medium enterprise, you can consider getting a business loan from a bank. Nevertheless, careful research and a solid business plan are the criteria banks have set to give out loans to start-ups.

 

Angel Investor

In case your business requires a large amount of money, the best option out of the lot for you is to reach out to an angel investor. An angel investor is defined as a wealthy individual with extensive and enriching experience in a particular domain. Sometimes people confuse Venture capitalists with angel investors, however, there are some prominent differences that tell them apart. Venture capitalists do not invest their own money into a startup whereas angel investors do bring their own money into play. An angel investor will invest their own money in a business venture in their early stages and are very much involved in the process of supervising the operations. 

 

Crowdfunding

Crowdfunding is the newest resort that is becoming a rage, especially among the start-ups that promise to serve the society with the service or the products they offer. It is the process of raising small funds individually from a large number of individuals. People invest their money in these startups expecting a reward, product, service, or equity in the business, generally. However, there could be several individuals who do not expect anything in return in case a startup is trying to serve the society.

 

Conclusion

Business financing has become a basic necessity for almost all businesses and this is when the options mentioned above play the most important role. Once you figure out nature, relevance, performance, and market opportunities, it will be a cakewalk for you to decide which option serves your business best.