Startup Financing

Money is the blood line for every business. Without finance, the business cannot sustain. Every year thousands of businesses start and shut down after a few months or year of running just because of money. For generating revenue from your idea is quite a tedious task as for this you need a fuel named capital. That’s why at every stage of business, entrepreneurs find themselves asking- how to get finance for my start up?

Startup money is what entrepreneurs utilize to cover some or all of the costs associated with starting a new firm. This comprises initial employees, office space, permits, licensing, inventory, research and market testing, product manufacture, marketing, and any other expenses. In many situations, a new firm needs more than one round of startup capital investment to get off the ground.

Bootstrapping Your Startup Business:

Bootstrapping means self-funding, it is an efficient way of start-up financing, especially when you are just starting your business.  You can invest from your own funding or take help from your family, or friends to contribute. 

• Advantage:

1. No paperwork, less risk 
2. Own money, own risk

• Disadvantage

1. Not an ample amount of money is available

Angel Investment

Angel investors are individuals with surplus cash and a keen interest to invest in upcoming startups. They also work in groups of networks to collectively screen the proposals before investing. They can also offer mentoring or advice alongside capital.

• Advantage

1. No need of collateral
2. No repayments 

• Disadvantage

Takes time to find a suitable angel investor

Venture Capitalist

An individual or organization made an investment in the pre-profitability business by the company which pools money from individuals and institutions.

• Advantages

1. This investment is comparatively less risky since the revenue stream is proven

• Disadvantages

1. Loss of control

Raise Money Through Bank Loan

For every start banks are the main source of funding but it is difficult to get, banks always provide funds against the collateral.

• Advantages

1. Get tax benefits against interest 
2. Easy option comparatively from other sources

• Disadvantages

1. More paperwork
2. Collateral deposit

Loans from NBFCs

For startup companies, NBFC are also a good source of funding, as these institutions provide loans easily compare to banks.

• Advantages

1. Less paperwork compared to banks
2. Customer-friendly

• Disadvantages

1. High-interest rate

Funding from Government Program

The Government also launches schemes for accelerating business in the economy. For example, the government has raised the MUDRA loan which starts with an initial corpus of Rs. 20,000 crores to extend benefits to around 10 lakh SMEs.

• Advantages 

1. Authentic source of funding
2. Get funding at a subsidies rate

• Disadvantages

1. Lengthy process
2. Get funding of less amount