” Capital is what Fuels your Idea“
Once a business plan is set , Financing is the first thing the person thinks about . The one aspect that worries every entrepreneur is that through what means should he secure the Capital . Today we will discuss a few ways to help you secure capital for your business. Lets look at a few of them :
- The first and the most basic step to finance a startup is for the Founder/Co-Founder to invest in the company themselves . Initially , no one wants to believe in the future of the company and so many are hesitant to fund the business . So putting in ones savings is the best way to start and pump the business.
- Outside of self individual shell is to Look for Angel Investors . They are people who do not invest in a business mostly for high returns . They are people in your family , friends circle or relatives who look into investing in your business not for the sake of high profits but to fuel your startup and give it a jump start .
- The startups in India can also opt for bank loans , as the Indian Government has launched a few schemes to make it easy for a startup to take loans. The most popular of all the schemes is the MUDRA scheme launched by the Indian Government and is categorized under 3 loan schemes named as Shishu, Kishor and Tarun. Under Mudra’s Shishu scheme interested applicants can get loan up to Rs. 50,000, whereas under Kishore scheme the amount ranges between Rs. 5 lakh to Rs. 10 lakh. It is up to Rs. 10 lakh, if the applicant opts for Mudra’s Tarun loan scheme.
- Once the Proof Of Concept is established or the business is small enough even to run , one can look for Venture Capitalists . Venture Capitalists are people who are basically investors and look for investing in companies in which they see a growth scope. They can invest from a few thousands of dollars to even lakhs of dollars into the business if they see the model and the idea of the business to be strong . But all this comes for an “interest”. They invest in a company expecting high rates of return on their investment.
- One can also raise capital from customers . Yes , customers can finance your business too . This process is called Crowdfunding . There are websites like Indiegogo and Kickstarter(The links to them are provided below) where in one can put in their business idea , the product and set different pricing for the same . They have to set a financial goal , like maybe $2,00,000 , which the customers can see on the page and know that out of the goal set how much is achieved . If they like the product or the idea , they can invest and receive the product before it starts selling the market .
- There is also something called Entrepreneurship Supporting Institutions . They are actually specific banks for entrepreneurs. Entrepreneurs can go there, pitch their business venture, and if feasibly, the entrepreneurial bank will help provide the capital needed to conduct business activities.The best part about these institutions and banks is that they provide allow for a longer payback period meaning that you have more time to generate profit.
- Taking onto Business Incubators and Accelerators is also one of the options one can look into . Found in almost every major city, these programs assist hundreds of startup businesses every year. Though used interchangeably, there are few fundamental differences between the two terms. Incubators are like a parent to to a child, who nurture the business providing shelter tools and training and network to a business. Accelerators so more or less the same thing, but an incubator helps/assists/nurtures a business to walk, while accelerator helps to run/take a giant leap. These programs normally run for 4-8 months and require time commitment from the business owners. You will also be able to make good connections with mentors, investors and other fellow startups using this platform. In US, companies like Dropbox and Airbnb started with an accelerator
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