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Dr Mukesh Jindal

Dr Mukesh Jindal CFA, CFP, CAIA, Ph.D, Co-Founder, Alpha Capita

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Ways To Raise Capital For Your Startup Biz

There have been cases, where successful entrepreneurs saved from their salaries and set aside a particular amount, to be used to fund their ventures. These savings come without any interest cost and are not required to pay back

Introducing a startup is the dream of millions of youngsters these days. The last decade has witnessed an unmatched rise in the introduction of startups in our country. Working professionals, who have great ideas still wish to introduce their own brands in the market. However, the major challenge in this direction is related to raising capital for the business. There are several ways through which a startup idea can be funded.

Here are some ways to raise capital for your startup business:

Raising money is from your own capital is one of the most convenient ways to fund a startup and there have been many success stories related to the same. There have been cases, where successful entrepreneurs saved from their salaries and set aside a particular amount, to be used to fund their ventures. These savings come without any interest cost and are not required to pay back. Additionally, there is a certain amount of ‘belonging’ associated with this hard-earned money, hence it is invested carefully.

From family or friends

Your family and friends are close to you and if you are working on an idea with passion and dedication, they would know about it. It is easier to convince a family member or a close friend to fund capital for your venture, than to go out to convince investors who don't know you, personally. Besides, the interest rates and terms of repayment can be negotiated/agreed upon.

Seep money from angel investors

Angel investors are successful entrepreneurs who have gone through troubles and challenges and established themselves in their respective fields. If you can connect with angel investors through networking and socializing, the path to getting funded gets easier. You just have to project your business idea in the correct light while addressing all the concerns of the investor. Another benefit of getting funded by an angel investor is that you get perfect mentorship for your venture. A person who has experienced teething troubles in their own business would be the perfect guide for you to avoid the same.

Crowdfunding platforms

There are multiple crowdfunding platforms that welcome business startups to project their ideas and get funded by the users of the platform. One thing to ensure while preparing a crowdfunding pitch is that it should have a larger appeal and it should invoke the attention of the crowd. If your idea poses a solution for a wider populace, you have a winner! You just need to connect with the audience and the pitch should be self-explanatory for the queries of the platform’s users.

Early stage VC funds

Budding entrepreneurs should not rush to raise money. If the money is raised at an earlier stage in the life of the venture, more dilution of equity needs to be done at a much cheaper price. This becomes a problem in the future when business becomes successful. Young entrepreneurs should try to reach out to external investors after some market success of their minimum viable product.

Startup loans

The Central Government runs a scheme to fund startups at cheaper interest rates and easy repayment options. Taking a cue from the government, several banks and financial institutions have also started offering similar loan options. Debt can be availed to fund your startup venture and it can be paid back from the revenue. However, this option must be thoroughly reviewed and analyzed. It is highly advisable to take the expert opinion of a financial advisor or banking expert. Also, you should be completely confident about your business idea.

 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house


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