ABCD of Start up Funding

They say “goddess lakshmi & Saraswati never comes together to a person”. When you have great ideas your wallet doesn’t support it to make it reality & likewise if you have fat wallet you might not have best brain to use it. In modern world investors & entrepreneurs can be called as Lakshmi & saraswati and when they come together a successful business house we see. So, here is an article which will talk about how these two can meet Money & Idea.

It has been raining start ups in India for past 3-4 years and in fact India ranks fifth in the world in terms of startups with nearly 3100 currently in operation .172 VCs, 43 angel investors & 48 incubators.

Incubators

These set ups precede the seed funding stage & help the entrepreneur develop a business idea or make a prototype by providing resources and services in exchange for an equity stake ranging from 2-10% .Incubators offer legal compliances, a management training, mentoring and access to industry experts as well as to funding through angel investors or VCs.Most don’t offer funding, but make up for it by providing logistics & external supports so that entrepreneur can focus on work without worrying about nitty – gritty.

Ex- QuezX.com which provides recruitment for start ups

Angel Investors

Angel investors are usually individuals or a group of industry professionals wo are willing to fund your venture in return for an equity stake. The amount can range from Rs 5 lakh to Rs 3 crore and not as high as those provided by VCs since risk at seeding level is high .

Top Angel investor in India includes Ranjan Anandan, Indian angel Network, K.Ganesh

Crowd Funding

As the name suggests this kind of funding happens through large no. of peoples by contributing small amounts, usually through internet.

The entrepreneur needs to put up on a portal his profile & presentation which should include business idea, its impact, rewards & returns for investors. It should be supported by images & videos of the project .The bottom line are that it should be convincing enough to draw investors.

Wishberry.in & catapoolt are among such firms in India.

Venture Capitalists

After the initial seed funding stage comes expansion & growth where you need big money to operate further this is where VC comes in offering anywhere between Rs1 – 300 crore in exchange for a high stake .

Recently filpakrt,snapdeal ,ola were in news because of this big ticket deals.

Example – Orios venture partners

Bank Loans

The most traditional method of funding .Unlike VCs /angel investors which have an equity stake, banks do not seek ownership in your venture .However there are several drawbacks not only you pay interest on loan but also has to be done on time irrespective of how your business is faring. They also entail a lot of paper work.

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