Funding for a Startup in India: Available Options

October 14, 2021 by No Comments

In this article, you will learn how to get funding for a startup in India. In the past few years, startups have been more popular than ever. In 2016 alone, there were thousands of new companies started in India! 

There are many reasons as to why this is happening, but one of them is that it’s easier to get funding for a startup due to crowdfunding sites like Kickstarter and GoFundMe

With these platforms, entrepreneurs in India can find people who want their products and services without having to go through venture capitalists or banks. 

We are going to dive into this topic more deeply below:

What type of funding does a startup need in India?  

A lot of people think that startups only need equity-based financing from investors such as angel investors or venture capitalists – but actually, they may need different types of financing depending on the company.  

One type of financing is debt-based, which means that a startup borrows money from investors and has to repay them with interest over time (example: credit cards). 

Another one is equity-based which means that an investor will give you funds in exchange for part ownership of your company – so if it’s successful they’ll be able to sell their shares at a higher price later on.

What are some types of funding for a startup in India? 

There can actually be many different forms of funding depending on what kind it is and who provides the capital! 

A few examples include;

  • Bank loans
  • Angel investments or venture capitalist rounds. 
ALSO READ  How To Start A Startup

In addition, there are also peer-to-peer lending sites like Lending Club where small businesses in India find lenders willing to give them money.  

Most recently, we have seen crowdfunding sites like Kickstarter and GoFundMe grow in popularity.

So if you need a small amount of capital to get your business off the ground, then these platforms are definitely worth checking out!

Why seek funding for a startup in India?

There can be many reasons that entrepreneurs look for investors such as: 

  • Strong brand recognition 
  • Access to resources they might not otherwise have (expertise) 
  • More flexibility on their management style (avoiding bureaucracy)
  • Get money to expand more quickly (increase revenue and production output).

What’s the process of seeking funding?  

As we mentioned above, there are two main ways that startups can receive financing: debt-based or equity-based.

For each type of financing, you will need different documents and processes – so it is important to know what you are getting yourself into! 

Most people think that they will just have meetings with investors on their terms but in reality, raising capital for a startup in India is a business relationship where both sides need to be happy. 

The best way for someone looking for help from an investor is by giving them something such as collateral or shares that they want in return for the loan. 

It may take some time before your business is a good candidate for funding. If you’ve been given the green light, then it’s time to start preparing!

What are some tips on getting funded?  

An entrepreneur looking for money from an investor in India should do their research first and figure out what type of financing they are going after as the process will be different depending on this information. 

ALSO READ  How Startups Raise Money: Top 8 Strategies for Startup Funding

In addition, there may need to be certain terms written into your contract such as who gets paid first in case your company goes bankrupt or how long someone can hold onto shares before selling them (liquidity event). 

It is important that everyone agrees upon these things beforehand so both parties walk away happy with the deal! 

One last thing:

If you want access to top investors like those at Y-Combinator or 500 Startups, then you need to meet certain criteria such as having a prototype and some revenue. 

If you don’t have these things yet but want access to top investors in Silicon Valley, there are also accelerator programs like Techstars that will help take your startup from idea phase to company!

What else should I know? 

You may think that raising funding for a startup in India is easy – but we’re here to tell you it’s not all sunshine and rainbows! 

It can be difficult because most people think they will get funding right away on their own terms (via angel investors). 

But this isn’t always the case so it is important to be realistic about what might happen before diving into anything. 

We hope our guide helps entrepreneurs in India seeking money out there – good luck!

Leave a Comment

Your email address will not be published. Required fields are marked *