How to Raise Fund for Startup in India in 2022?

When it comes to a business the most important thing is funding and if it's a startup, money becomes more important. The survival of a business hugely depends on funding, so that the business can meet expenditure, as the profit will be average at first.

Money is the fuel needed to run any business. There are numerous stories of business ventures which could not survive despite having great potential, due to shortage of money. Getting funds is especially challenging when a startup is in the initial stage. Hence, it is important for emerging startups to be aware of the various funding options.

According to a report, Indian startups raise a record $6.9 billion so far in 2021. So, we have accumulated a list of sources from where you can raise funds for your startups, in India.

Microcredit:

 The credit or loan of money in small amounts to budding entrepreneurs by individuals or a group of investors instead of financial institutions and banks, such credit loans are known as Microcredit. Micro-credit can be a great source of funding for low scale businesses. Microcredit loans are not secured loans. The credit score of the debtor is a major factor for the creditor; it helps in deciding the interest that the debtor or entrepreneur would have to pay to the creditor(investor) in addition to the original principal amount.

Crowdfunding:

Using online websites nowadays, individuals who wants to raise funds for their startup can make use of crowdfunding. The founder of that particular startup gets some percentage of equity or reward in exchange for the contribution like shown in shark tank Tv show. GoFundMe and Kickstarter are some of the most popular and good sites for crowdfunding. Crowdfunding is easier to acquire than traditional bank loans.

Angel investors:

Rich people who are interested in assisting the business owner through loan-free funding are known as Angel investors. They ask for a share in the ownership of the business and provide counselling, plans and advice from their previous experiences. Such angel investors usually invest in early-stage startups that can generate a good deal in the future. So, if you have a great startup idea, then approaching Angel investors like Ashneer Grover, Anupam mittal,Vijayshekhar Sharma,etc. and many others are there, can be a good way to raise funding for your startup.

Equipment Finance:

As the name suggests, Equipment finance involves Equipements or some other item instead of money at disposal. The core idea is to allow startups to save money on purchasing these equipments and use the same for other purposes. So, financing of equipments can be the funding option for startups instead of money that require Machinery and other Equipment.

Business credit cards:

As the name suggests, business credit cards allow lenders to access money with a credit limit for transactions. Business credit cards are Just like ordinary credit cards, the card owner is responsible to be penalized if the loan amount is not repaid in time at the end of the particular billing period.

Capitalist Firm:

There are many capitalists firm that readily provides funding for a startups.  Unlike angel investors, this capitalist firms are proper firms aimed at helping startups to develop. This firms plays an active role in running these startups. Apart from taking stakes in the business, the firm has a say in the business’s decisions as well. There are two types of entities in such firms— ‘limited’ partners who puts hard cash into the venture capitalists’ funds meant for helping startups, and ‘general’ partners who work alongside the startup by teaming up with the startup’s management different business-related decisions.

Central Government loans and grants:

The central government authority of India also provides funds for startups in different sectors of the economy. In India, there are many schemes such as MUDRA loan scheme, Stand Up India scheme, and Credit guarantee scheme under which the Government provide loans to startups.

Also, there are schemes introduced by the State Government of different states of India, like Sarothi startup loan by the Govt of Assam, Rajasthan Startup Fest, Kerela State Self Entrepreneur Development Mission.

Bank Loans:   

Lastly let's talk about the old method of funding, the bank loans. Banks provide different kind of loans like working capital loans, term loans and asset-backed loans. But the main problem with these loans is that they offer unsecured loans to only such startups that have been in business for  atleast 2 years and which are earning a specific amount of profit.

   

Conclusion:

If you are thinking about long-term business sustainability, then funding is great option.  Before going for funding, you need to understand what type of funding is actually needed for your startup.