[ Best 10 ] Funding Options To Raise funds For Your Business

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Funding options to fund your business

Funding options to fund your business

An exciting and helpful topic we cover today for all the aspirant entrepreneurs and also people who are into this already. Business no matter started when it always requires fuel that is money. Money is essential, and the essential thing to run any business. It is the primary reason why people fail to achieve success in the journey of becoming a potential entrepreneur.

According to a study conducted in the past, about 94% of people get demoted in the first year of the business, and this is due to lack of capital. The question arises, How can one finance his startup?

We are here with some tips which can help you continue your business in the initial stage. Let’s get a quick start to it.

1. Self – Funding

They are also known as bootstrapping is an effective way to finance your startup, especially when your business is in the nascent stage. When in the initial stage, it is often difficult for the firms to raise funding and to get people to believe in their plan. At such times, one can either invest from their savings or seek help from their relatives. This is quite a flexible option where there will be fewer formalities and easy and flexible returns.

Self-funding or bootstrapping has its options and liabilities, and hence this should be considered as the first option to fund any business. Provided acknowledge what amount is required, if it is small, one can go for this.

2. Crowd Funding

Crowd Funding is an option where you seek funding from multiple people. This is a little complicated process as it requires a concrete idea where people find it worth investing in. This also serves a platform where one can gauge the future of the product/ service. Herein, you put up your plan to be discussed and spoken of. People who are ready to invest scrutinize your business idea, so this works as a tester alongside funding. Getting multiple opinions and reviews on your concept, as well as knowing how people react to it, says it all.

An effective means to cover up both the purposes adequately. This is a competitive way to access funding, as there are tons of business ideas lurking already. Your approach needs to be cutthroat and potential enough to grab the confidence of investors.

3. Angel Investment

Angel investors are people with surplus capital looking to invest in startups for higher returns. They are generally into funding businesses in their nascent stage of growth. They usually work in groups wherein they screen projects and take a holistic view of the business they look to invest in, apart from investments, they also give suggestions and advice to help the startups.

Angel investors have helped company’s like Google, Yahoo, Alibaba in their initial stage.

They invest in the initial stage of growth of the company’s where they get a higher rate of return. They generally spend less than venture capital. Let us see this in the next point.

4. Venture Capital Investments

This is slightly on the big betting sides. Venture capitals only invest in company’s that have higher potential. They are strict and follow a concrete pattern of funding. They usually consider in investing in business against equity and hit exit when an IPO or acquisition kicks in. They provide mentorship, guiding the firm, and evaluating the success of the business in the coming future.

They generally go for businesses that have crossed the hurdle of the infant stage and are doing great in terms of generating revenues. Industries like Flipkart, Uber, etc., who already have a strategy in place are where their interest lies. The cons of seeking help from this industry would be, they are interested in seeking returns right after 3-4 years of investment. If they don’t see any profits in the said period, they might want to cease their support.

5. Incubator & Accelerator Programs

It can be considered as a funding option at an early stage. This can be found everywhere, all major cities assisting many startups every year.

The difference between the two, Incubator and Accelerator. And the difference is incubator nurtures the business, it treats the startups like a baby, providing it with the shelter and an environment to grow. Whereas accelerator helps pace up the business, take it to the next level, give it wings. This will help companies become more and connect with investors and inventors.

6. Contest

Some contests help you acquire funds by winning the competition. These competitions involve ideation or making of a product, the best idea or product wins the game, providing them with funds to elevate the business.

Winning these competitions can also give you exposure to media and popularity in the business world. One can pitch it through a person or presentation of the business plan; doing this will help one grow and get reliable assistance in taking up the business ahead.

7. Bank Loans

Usually, banks are approached first by businessmen to generate funding. The majority of the banks provide loans and have multiple options to go for. The most common ones are, generating working capital loans and other is funding. This is to run one wave of revenue generation, and the stocks and debtors further decide the limits.

This includes the process of sharing the plan and proving its authenticity along with the report based on which the loan is sanctioned. Different banks provide different options that can be used for your business.

8. Microfinance Companies

Non-Banking Financial Corporations are places where loans are provided without legal qualification, unlike banks. This is specially designed for people who are not conventional for banking services. There is a way such business owners can raise funds for their respective businesses. This is a trendy option for people who don’t get qualified by the ban procedures.

9. Government Programs

A 10, 000 Crore Startup Fund is launched by Indian govt in the budget of the year 2014- 2015. This was done to boost the startups and aid their requirements. MUDRA that is, ‘Pradhan Mantri Micro Units Development Refinance Agency Limited, provides an initial amount of 20, 000 Crore. Ne needs to submit the business plan and wait until it gets approved. Once it does, your loan gets sanctioned. Loans are available like Shishu, Kishore, Tarun, which help entrepreneurs grow their businesses. SIBDI’s also granted a credit to the business owner, Small Industry Development Bank Of India also offers business loans to the startups.

10. Pre-selling

There are some other quick ways to arrange capital for your business. This can be Pre-selling your products and earning some. Second is sell assets temporarily to get you covered. Another one is to business credit cards to finance your business.

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