According to NASSCOM, start-ups in India witnessed an upsurge of 108% in funding in 2018 compared to the previous year. The main reason behind this growth is the rise of various funding sources and multiple schemes from the government. The introduction of GST has also simplified the supply chain management system and reduced the operational costs of small-scale enterprises.
Along with that, individuals are now also availing a start up business loan in India to fund the required expenses. Here is a list of the top 6 funding options for a start-up business.
1. Venture capitalists
Venture capitalists offer professionally managed funds to the businesses which have the potential to succeed in the market. Along with funding, they also provide mentorship to the individuals so that they can generate maximum profit out of their business. They acquire equity in a company when they invest and leave the enterprise when there is an acquisition or IPO.
2. Angel investors
Entrepreneurs can avail the required funding from angel investors. They are individuals having surplus funds in hand and are looking for a potential business to invest in. They expect equity in the company against the funds they invest. They may work alone or in large network groups to select the start-ups with the most potential before they invest.
Bootstrapping or self-funding is an effective way to raise capital for your business. Entrepreneurs can face some troubles to avail funding to start their enterprise without showing any traction in the market and showing potential for success. Individuals may invest from their savings or borrow money from family and friends to get started with the business. It is less complicated than availing finance from any external source.
4. Initiatives from the Government like MUDRA loans
The Indian Government has taken various initiatives to promote promising start-ups in India. The Pradhan Mantri Mudra Loan is one such beneficial scheme, under which Rs. 20,000 Crore has been allotted to provide financial aid to over 10 Lakh small businesses.
Individuals are allotted a MUDRA card which they can use to withdraw the designated amount. They can avail a start-up business loan in India under the three categories present in the scheme, namely Shishu, Kishore and Tarun.
Crowdfunding, as a source of finance, has gained immense popularity over the past few years. Entrepreneurs are required to put up a detailed description of their business in any of the online crowdfunding platforms. They have to mention all the related details of their enterprise, including goals of their company, plans to make a profit, amount and reason for the requirement of the funds.
Customers who believe in the idea can either pre-book their product or service. They can also make donations to the start-up. The benefit of crowdfunding is that it offers a proper market platform along with funding. It is a creative way of raising funds for a small business.
6. Business loans
Individuals can also avail various financial products from a lender to meet the required expenses. They can avail an unsecured start-up business loan in India to meet any of the costs required, starting from working capital needs, purchase of machinery, expenditures in infrastructure, etc. First, you need to calculate how much working capital your business needs, and seek a loan amount accordingly.