Have you got a brilliant start-up idea? Great! Do you know the ways to fund your business to convert your idea into a revenue-generating model? “Lack of funding” is the villain in many start-up failure stories. So let’s learn more about funding, the much-needed fuel for creating a business success story.
The financial sector is going through a boom in technology. Banks and NBFCs are currently offering more ways to finance small businesses than ever. There are business loans, private finance loans, and peer-to-peer lending platforms to support your business endeavour.
5 Most Effective Ways to Raise Capital for Start-up
The best of the 5 start-up financing options are mentioned here! You can knock on any of these doors to get funds for your start-up.
- Crowdfunding Platforms
It’s one of the most modern and hassle-free ways to raise funds for your start-up. Entrepreneurs can present their business idea on crowdfunding web-based platforms or networking sites. If the investors on the platform believe in the business idea, they can directly contact you for investing.
These platforms provide you freedom from all the mediators and rad tapes. You can contact a potential investor directly and vice versa is also possible. However, presenting an excellent presentation will significantly help. Therefore include details like your goal, the funds you need, how you plan to use them, how much profit you expect, and other relevant information.
- Union Government Schemes
The government of India is looking up to start-ups to lead the way forward for the economy. It wants to help budding entrepreneurs like you to realise your dream. Therefore there are various schemes launched by the union government, such as ASPIRE, PMMY, CGT SME, etc., to aid start-ups and small businesses in India.
In other ways to finance small businesses, the government is also encouraging banks and financial institutions to provide capital by giving guarantees to the lenders.
- Your Savings
Yes! Before you bring the idea of financing your business to others, your money must be invested in its first. So figure out how much you can invest in your business and include that figure in your proposal. The investors, venture capitalists and government entities would also want you to have a financial stake in your business.
So they may ask you, “Is your money invested”. An affirmative answer can go in your favour. In this way, they see your confidence in your idea as you are also taking a financial risk yourself.
- Take Private Finance Loans or Business Loans
Look for private finance or business loans from venture capitalists, angel investors, banks, and online platforms. But identify the lenders that use modern & smart mechanisms. Otherwise, you may get frustrated by the extended time traditional banks take to process your loans and still not approve for some reason.
There are online platforms that provide business loans that are free of collateral. If you need emergency money help, these loans are ideal owing to their instant online approval with minimum paperwork.
- Peer-to-Peer Lending
This is another smart and swift way to finance a small business. Peer-to-peer lending communities form a connection between lenders and borrowers. You can directly get in touch with the investor for money through these platforms. Although, the rate of interest is higher on the amount which investors lend you on peer-to-peer lending platforms. But the process of getting money is quick.
Due to the high rate of interest, the lenders see their money as an investment in your business. But for you, it’s a credit or a loan. RBI regulates these platforms for the betterment of both lenders and investors.
Make Your Dream a Reality
Hopefully, at least 1 of these 5 smart ways to fund your business will work for you. You can also opt for multiple options to diversify your finance.
While you are trying to raise venture capital, ensure your business is in order. That means applying all good corporate governance techniques and fiscal discipline. This way, the investors and financial institutes see your business as a genuinely promising venture.
Author Bio:
Shashank Modi is a content marketer who works at KreditBee – India’s leading FinTech platform that provides personal loans for salaried and self-employed individuals. Shashank writes to empower his readers so they can take control of their finances and live their lives without worrying about money constantly. His ultimate goal is to write a book to teach kids about finance and budgeting.
