{"id":12359,"date":"2018-12-06T12:26:27","date_gmt":"2018-12-06T06:56:27","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=12359"},"modified":"2023-06-24T23:54:33","modified_gmt":"2023-06-24T18:24:33","slug":"financing-options-available-startups","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/financing-options-available-startups\/","title":{"rendered":"What are the Financing Options available to Startups in India?"},"content":{"rendered":"

In India, for startups, there are number of financing options available. In the growth of the business, finance is a very big factor. The most feasible financing option available for startups varies from business to business. A business venture needs funds to survive. Here we are making an attempt to provide a brief of financing options available to startups.<\/p>\n\n\n\n

The startup is always backed by a strong idea, and initially, funding seems quite challenging. So let’s take in-depth knowledge of financing options available to startups.<\/p>\n\n\n\n

You can fund your new venture or startup through the following:<\/em><\/strong><\/p>\n\n\n\n

  1. Self-funding \/ Personal Savings<\/li>
  2. Crowd-funding<\/li>
  3. Angel Investment<\/li>
  4. Venture Capital<\/li>
  5. Loan from Banks\/NBFCs<\/li>
  6. External Commercial Borrowing (ECB)<\/li>
  7. CGTMSE Loans<\/li>
  8. Venture Debt<\/li><\/ol><\/div>\n\n\n\n

    Let’s grasp the basic knowledge of these terms:<\/p>\n\n\n\n

    a. Self-funding \/ Personal Savings<\/h2>\n\n\n\n

    To fund the company, personal savings can be used, or you can also take additional financial support from your family & friends. It is possible, but for reasons, you might not prefer to go with this.<\/p>\n\n\n\n

    b. Crowdfunding<\/h2>\n\n\n\n

    Crowdfunding is gaining a lot of popularity these days as it is a new way of funding a startup. At the same time, it’s more like taking a loan or investments by more than one person.<\/p>\n\n\n\n

    The next question coming into your mind is, “How it works?” On a crowdfunding platform, a detailed description of the business will be provided by an entrepreneur. Under which proper business plan & objective of the business will be set out; along with this, details regarding how much funding is required will also be mentioned.<\/p>\n\n\n\n

    This will enable the consumer to know more about the business, and if they like the idea, then they can make the investment. If they really believe in the business, then they can help by making a contribution.<\/p>\n\n\n\n

    The best part of crowdfunding is that interest is also generated; thus, it helps in marketing besides funding. Under this, funding to startups is done by common people; therefore, it eliminates professional investors and brokers. If a company has a successful campaign, then it might attract venture-capital investment.<\/p>\n\n\n\n

    c. Angel Investment<\/h2>\n\n\n\n

    If you have the ability to visualize the bigger picture of your startup, then you can go for angel investment. In angel investment, investors are like angles that have deep pockets. They are termed as High Net worth Individuals (HNIs).<\/p>\n\n\n\n

    Such angel investors make an investment in a business venture in return for ownership equity or convertible debt. Investment can be made by angel investors in the form of a one-time investment or on an ongoing basis<\/a> in order to give financial support to the business venture to carry out the operations of the business.<\/p>\n\n\n\n

    In an Indian company, angel funds are regulated by the SEBI (Alternative Investment Funds) Regulations, 2012<\/a>:<\/p>\n\n\n\n

    There are following restrictions imposed on angel funds:<\/p>\n\n\n\n