7 most effective Ways To Raise funds For Startup Business

fundraising for startups

Opening? You have a great idea, you have the will, and you know you will do it. Whether you are a small business or a large company, you need capital investment to start a business. Funding provides a strong foundation for business initiatives and supports continued expansion and growth. Finding funding for a startup business can be a difficult and arduous task. However, to make it easier, we’ve compiled a few key fundraising techniques to help you find funding.

Self-financing or self-investment is the best form of financing used by some entrepreneurs. Even taking out loans and asking venture capitalists and government agencies to fund their startups, they’re still asking that question. How much capital do you invest in a startup? Investing your own savings is the best option for a startup. At the later stage of your business, business loans are an easy option. The lender has no reason to refuse as the risk factor is low given the stability of the business.

  • Finding a business angel

Those with surplus funds are known to be angel investors and these individuals are interested in investing in Indian and global startups. The risks associated with these investments by angel investors are higher than loans offered by financial institutions. This is because angel investors plan their investments in search of higher profit returns. 

  • Focus on crowdfunding

Crowdfunding is the concept of raising funds from multiple investors through social networking and web-based platforms, primarily for business purposes. Online crowdfunding web portals collect donations for various causes such as social causes, charities, ideas, disaster relief, and events. This concept or idea helps in raising funds for startups and first-time business her owners and also promotes social and cultural causes. 

  • Apply for a loan under a government program 

Government of India supports start-ups, SMEs and MSMEs to boost socio-economic growth of India’s rural areas, women entrepreneurs, educated youth, SC/ST category individuals and Small and Medium Enterprises (SSIs) launched various financing schemes aimed at ), village, rural and urban people, etc. So we can avail any one of these schemes to get a better rate of interest while availing loan on startup.

  • Take loans from private and public banks

Banks are seen as a top priority for start-ups as they see them as a more reliable and convenient way to raise funds. Banks provide financing to startups in two forms known as term loans and working capital loans. Almost all public and private sector banks in India offer business loans for startups. However, the interest rate, loan amount, and repayment period vary from bank to bank.

  • Get a small business loan from an NBFC or MFI

If you’re new to lending and don’t have a financial or credit history, it can be difficult to get a loan from a private or public bank. Check your credit history and contact non-bank financial companies (NBFCs) and microfinance institutions (MFIs) for start-up loans. Interest rates offered by NBFCS and MFIs are relatively higher compared to PSU banks.

  • Peer-to-peer lending

Peer-to-peer lending is a method of borrowing money that does not involve an intermediary in the entire process. Lenders lend money to borrowers as investments, and borrowers receive money to invest in startups. This process allows lenders to benefit from borrowers as the interest rates offered are higher compared to banks, NBFCS and MFIs. A peer-to-peer lending institution he is regulated by RBI to better both lenders and borrowers. Peer-to-peer lending is a type of loan for startups and an investment for lenders.

 

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