How to Raise Funds for Startup Business in India

Everyone is competing to open a business that can generate long-term income, rather than working in an office for someone else.

However, unfortunately, this desire is often not fulfilled due to limited capital.

To open a business, of course, you do need capital which is sometimes not small, but there is no need to worry about that because currently there are many ways to get business capital in India that can be done.

In India, several schemes are launched by the government of India to support Indian entrepreneurs to start their businesses. Make sure you will remain up to date with those schemes.

Here are some of the ways on how to raise funds for startup businesses in India:

Getting Capital from Bank Loans

Borrowing from a bank is a way to get raise funds for a startup business in India.

In contrast to mortgage assets, banks usually rarely lend funds to new businesses, instead they prioritize existing businesses.

Why is that? Because if you borrow from a bank, you must provide proof of the financial health of your business, so that the bank can ensure that you can pay the installments.

Generally, when you borrow at a bank, the bank will provide multipurpose credit (loans with collateral), so you still need to provide guarantees even though your business financial statements show that you can pay the loan.

Get Loan Capital from Cooperatives

A cooperative is simply an organization in the economic field that is run for the common good.

Meanwhile, in its activities, cooperatives usually carry out all savings and loan activities based on the principle of kinship.

Indeed, loans in cooperatives are usually only intended specifically for members.

But, if you want to borrow venture capital funds, don’t worry because you can take care of them easily.

Later, if you have applied for a loan at the cooperative, your status will change to a prospective member of the cooperative.

Business Capital from Personal Funds (Self-Financing)

For those of you who choose personal funds as the initial capital for your business, I hope this is the right decision.

At least you can relax a little more because you don’t have to think about your business profits coming back fatly.

You also don’t have to be responsible to anyone but yourself.

Even so, as much as possible you still have to think about the future of the business you are living in.

In addition, discipline is also very important to ensure your business trip.

Don’t just think you’re funding your own business, you’re just being arbitrary.

As a result, there is no advantage that you can grasp. You even suffer losses due to your negligence.

Simply put, consider the advantages and disadvantages of funding a business with personal funds below.

Advantages:

  • Free to make business decisions
  • A little more relax to achieve profit
  • Does not depend on many people (investors)

Weakness:

  • It is difficult to achieve the desired amount of capital if the nominal is too large
  • There are only two choices; from own savings or loan funds
  • The cost is borne by yourself

Ways for self-financing

  1. Loan funds from the closest people

How to get business capital from personal funds can be done in various ways.

One of them is by partnering with your family members, moreover, your business is a business passed down from family.

If you are reluctant to partner with family members, you can work with your partner or closest friends who have the same goal.

It would be easier, wouldn’t it?

The closest people are people who will usually always provide support for you.

They are usually very eager to see progress from you both financially and in character.

Especially in financial matters, if you can explain in detail what you will do and how the business idea you have, usually the people closest to you will assist you voluntarily.

Try applying for a loan either to friends, parents, relatives, or anyone who is closest to you.

Speak clearly that the money borrowed will be used as business capital, and you will return it within a certain period of time.

Build trust in them that you are the one who will be responsible, and return the borrowed money on time.

Usually borrowing from the closest people will help you more, because sometimes loans don’t give interest at all.

  1. Save and Invest

In addition to collaborating with the closest relatives you trust, you can also save or invest long ago.

There are many successful entrepreneurs out there, who climb the ladder by saving money little by little and then investing in profitable instruments to get capital.

From there, they then use the funds and profits collected to open the business they have always dreamed of.

Bootstrapping

This term has not been widely disseminated because it is relatively new, but for those of you who want to build a startup, this method of obtaining business capital may be very useful.

Why so?

Because Bootstrapping is a known term for startup development.

Meanwhile, unlike most startups that rely on investors, with Bootstrapping the founders or business owners choose to rely on internal strengths.

So in other words, business actors who have just started a business rely on minimal capital from their own office and then make a turnover of income to develop their business.

Business actors, who use this method of obtaining business capital, usually start a business with small capital or even no capital at all.

Meanwhile, the challenge is that a founder must bring in early customers, so they can develop new market segments.

Reasons to do Bootstrapping

The following are the factors that influence the application of this method.

  1. Founders Have Their Own Ideals

Of course, usually, the owner of a business certainly has his own idealism in developing his business, therefore he chooses to bootstrap.

The reason is, that if you get capital from investors, of course, you have to submit to the demands given by investors.

Well, this is what sometimes makes founders feel constrained and not free.

  1. Such Demanding Conditions

Getting investors who want to fund our startup is definitely not that easy.

Therefore, bootstrapping is usually carried out for startups that have not yet found investors.

Even so, the owner of this business still wants to run and has confidence that his business will be big.

So, he does not need to wait for investors first.

Advantages of Bootstrapping

  1. Have Full Authority

Because it uses personal funds, of course, the results obtained are in your control.

In making business decisions, you also have full authority.

In another sense, you can have the freedom to run your business.

  1. Can Be More Flexible in Business

Changing the direction of the business, of course, is not an easy task if you have investors, because like it or not, you have to communicate changes to your business plan and ask for their approval as well.

Well but, with bootstrapping you are the sole owner of the company so

  1. Focus on Product Development

As an early startup, you certainly have to compete in terms of product innovation.

Therefore, you can do product development to the maximum, and focus on improving quality and innovating.

It’s different from having investors because the goal is to make how the product makes a profit.

Disadvantages of Bootstrapping

  1. Limited Networking

Unfortunately, you will get a limited network or connection here.

Yet one of the things that can make a business thrive in relationships.

Unlike if you have investors, the relationships you have are certainly more.

  1. Business Grows Slowly

Here there is no encouragement from investors to continue to progress and develop, so the bootstrapping actors may be in their comfort zone.

When the business has grown, it is not uncommon to be trapped in that atmosphere.

So the business can grow slowly. Even tend to be monotonous/stuck in certain phases

  1. Big Risks Must Be Born Alone

You do have full control and authority, but in doing business, of course, you need to get criticism/suggestions from other parties.

Well, so if anything happens in business, you have to bear it yourself.

Getting Capital from Venture Capital

Venture Capital is a funding company that does a lot of funding for startups around the world.

Venture Capital is usually not owned by an individual but is a combination of various parties.

Starting from wealthy investors, banks, to other financial institutions.

All of them raised funds to be distributed to many startup companies.

Later, these investors will benefit from the startup where they invest.

This venture capital usually has a venture capitalist that is tasked with managing and projecting profits from the ownership obtained from the company receiving the funds.

Before choosing to fund a startup company, they will usually provide advice, review the performance of the startup, and even look for opportunities to benefit from the funds invested.

Loans from E-Commerce, Wallets and Digital Banks

The bustling e-commerce emerging today also offers business capital loans to its users.

Usually, they will work with merchants who sell on their platform.

Now, with this collaboration, e-commerce parties can use data and offer loans from loan provider partners.

Not only that, but digital wallets are also currently very popular for use by Indian people because of their practicality.

Not only as a means of payment but now have they also offered loans in the form of installments without a credit card or Pay Later.

You can use this as business capital for operational expenses.

Please note that I’m not suggesting any of these methods for raising funds. It is for the information purpose that these can be ways to generate funds for a business in India. Visit the respective official websites to know more about the survives.

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Irfan Hassan
I am a blogger by passion and love to share ideas about businesses that you can start and earn your livelihood.

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