Ours is the age of Ideas, and a great idea has the power to change the world. That sounds philosophical, doesn’t it? But that’s true. When it comes to turning the idea into your dream future business, raising capital funding is the initial and most crucial step.
However, all your ideas and effort can go in vain if you don’t know how to raise enough capital and persuade investors. Therefore, we’ve covered everything in this article so that you can find answers to all of your questions and concerns about capital or seed funding for startups in India.
Prepare To Get Seed Funding For Startups in India
Seed funding is small amounts of money invested in startups; it can be from your family and friends in exchange for equity.
But before jumping onto funds, there are two things that will build the foundation of your startup and they are the following:
1. Prepare A Detailed Business Plan
The first and most important goal should be to create a clear, impressive, persuasive, and complete business strategy. Make sure to clear up any uncertainties, obstacles you may have that may arise in the future, or any questions you may receive from potential investors.
2. Create Your Professional Business Card And Website
The next phase is to increase your presence in professional and marketing environments. Prepare a professional card with clear information promoting your idea or services. To make your digital presence more impactful, you need to have a well-designed and functioning website.
8 Methods To Raise Funds For Your Startup
The startup fundraising process can be pretty hectic sometimes. It can take a long time to find a suitable investor. Here are the 8 best ways to get easy seed funding for startups in India.
1. Self-Funding or Bootstrapping
You are the first and most important person who will invest in your company as you are the person who has high hopes and believes in your idea or service. Also, it will prove that you are dedicated and firmly committed to your startup for the long term. So, if you have money, invest your assets in your startup.
2. Family Financing
Family financing is the amount that you raise from your spouse, parents, or other relatives. It is also known as patient capital. It is money that can be paid later in the form of profit or equity.
3. Venture Capital
Venture capital is money invested by big investors in exchange for equity. It is not like a loan or debt, but it is a long-term commitment, and it can be risky for the investors themselves. Venture investors usually show interest in technology-driven enterprises and companies with significant growth potential in industries like information technology, communications, and biotechnology.
4. Business Incubators
Business incubators are organizations that help businesses and entrepreneurs that provide a broad range of services to help fledgling companies and individual entrepreneurs grow their enterprises, starting with management training and office space and ending with venture capital investment. Srijan Capital, Startup Village, and Technopark TBI are some of the business incubators that are actively helping entrepreneurs in seed funding for startups in India.
5. Government Grants And Subsidies
The government added or supported organizations that provide funding for startups in order to empower entrepreneurs and businesses. These organizations are run by states as well as the central government and their criteria can be varied. In order to obtain funding, you generally need a clear business pitch, a registered, verified idea or service.
6. Bank Loans
The most commonly known and frequently used way to raise capital for a business was to go to a bank. However, when it came to lending, they were not very supportive of small enterprises or entrepreneurs. Solid credit history is one of the conditions that banks look for when considering a loan application.
7. Getting An Angel Investor
Angel investors are wealthy individuals or retired executives who directly invest in startups in which they are interested. They are people who are already leaders in their fields. They reserve the right to oversee the company’s management procedures in exchange for risking their money, and this usually includes assurance of transparency and a seat on the board of directors.
Getting funds from various interactive social platforms is quite popular nowadays. These platforms allow individuals to pitch their company ideas or challenges to an online community of investors, and people ready to support the ideas. Furthermore, crowdfunding enables businesses to display a variety of products that can be utilized for marketing and advertising.
Frequently Asked Questions FAQs
How Do Startups Get Seed Funding For Startups in India?
There are multiple ways in which we can get Seed funding for startups in India. Self-financing businesses, getting angel investors, crowdfunding, loans from local banks, and government subsidies are some common methods used by entrepreneurs to raise capital for their startups. Entrepreneurs also opt for family and friends funding for startups that need a small amount compared to others, and this is the most frequent method. Crowdfunding from various platforms is gaining popularity among youngsters.
How Do You Calculate Startup Capital?
When you plan to launch your own startup, it is crucial to evaluate the cost according to your startup’s requirements. Every startup has unique requirements, so you must evaluate the cost of production, office space, required equipment, workforce, marketing, promotion, rental agreements, and any other activity based on your startup’s demands. Prior to applying for funding, make a personal budget by adding up all potential expected costs.
How Do Governments Get Funding For Startups in India?
As part of the Startup India program, the government established the ‘Fund of Funds for Entrepreneurs (FFS)’ with a capital of INR 10,000 crore to provide funding support for startups. Apart from that, in India, state governments provide funding for startups through state-level agencies to assist entrepreneurs. FFS is supervised by the Small Industries Bank of India (SIDBI).
How Can I Get Capital Fast?
The most critical aspect of acquiring fast finance is to have a clear business goal and plan, as well as to use crowdsourcing. The second most efficient approach is to seek investment from an angel investor, who will invest directly in your startup and oversee management, saving you time and money in the early stages of your business.
How Can I Raise Money For My Startup?
You can get seed funding for startups in India in the following ways:
- Get funds from Ventures
- Get funds from various business incubators
- Present your idea in front of people and get money from Crowdfunding
- Find an angel investor
- Apply for government-added programs to help startups
- Maintain good relations with your local bank and persuade them to get a loan.
We’ve addressed all of the important points and questions that may concern you about raising funds. It is easier to receive seed funding for startups in India once you have a well-prepared and clear business plan by using any of the options listed above. After that, you may easily raise funds for your startup.