Top 10 Genuine Sources to Raise Funds For Your Startup

As per the recent study done by the government of India on Indian startups, India has the third-largest startup ecosystem in the world. Anticipations are India may witness a growth of 12% to 15% in the startups. However, starting a startup from scratch and converting it into a profitable venture is not an easy-peasy task. After all, the first step is the toughest one! The phrase fits well while hunting for genuine sources to raise funds for a startup business idea. So, to ease up the startup funding process, we have enumerated the top 10 best sources to get your startup funded.

Where to get Startup Funding:

1. Savings

The most common and smooth source to raise funds for your startups is your savings. If you want to have total charge over your startup venture and don't want to get into a tedious loan process and tackle picky investors, then you can plan your finances to save for your startup funding. Savings are the best option for startup funding if you plan to open a small to medium-sized venture.

2. Family Loans

To raise funds for your startup, you may approach your family, relatives, and friends. The funds raised by lending money from family, relatives, friends, or acquaintances are known as family loans. Lending money for your startup from your family or known person/ acquaintance is a familiar source for startup funding. Ensure that if you ask your family, relatives, or friends to lend money or invest in your startup, you make them part of your business. They will become the stakeholder in your business, and once you return their investment and fundings, your transaction will be closed. You can approach them for funding in two ways:

You can borrow the desired investment from your family or near ones for your startup and provide equity in your venture.
You can also borrow money from them as a loan and settle the borrowed funds later with interest rate.

If you are planning to open a medium-sized startup, and wondering where to get startup funding, then lending money from your relatives or friends will be the apt option for you. You will not have high-interest rates and loan repay duration pressure in case of family funding.

3. Bank Loans

If you don't have enough savings to start your startup and do not wish to borrow funds from your acquaintances, you can opt for bank loans. Bank loans are loans offered by private or government banks. Bank loans are a common source of funds for medium-sized startups. To take bank loans, you will have to ensure that you have:

Good credit score
Well-documented business plan
Valid and legit approvals
Required identification documents
Mandatory collaterals or assets

Ensure that you have all the necessary documents with you while applying for a bank loan for your startup. Based on your needs, you will have the required funds for your startup. Some private banks are now supporting startup business ideas and small-scale business owners. They provide them instant bank loans within a couple of weeks at a manageable interest rate after authenticating the necessary documents.

4. Crowdfunding

Are you looking for a safer startup funding idea in which you don't have to repay funds? Or have you collected funds but run short of some amount, and don't want to take loans from anyone? Then crowdfunding is the best source for you to raise funds for your startup. In crowdfunding, money is raised for a campaign via an online crowdfunding website in which people donate money to support several causes. It is one of the safest and prompt methods to raise funds for your startups as you don't have to sweat it out over high interest rates and limited loan duration for repaying. Crowdfunding for startups is quite popular these days, and hundreds of dreams are being fulfilled via crowdfunding websites.

5. Angel Investors

Angel investors, can be an entity or group of people interested in young startup business ideas. In return, they ask for a fixed rate of equity in the venture. They tend to invest in startup ideas because they get various tax benefits from the country's government with a low-risk rate. These investors risk investing more in promising startup ideas and getting high return rates from the demanded equity. So, if you are planning for a medium to high budget startup, and wondering how to find angel investors for your startup, then start working on your business niche. The angel investors can be interested to invest in your startup idea based on your business niche.

6. Government Funding for Startups

The government of India is promoting and supporting many startup ideas in recent years. They launched several startup business grants related to training and funding to small to medium-sized startup ideas. They have introduced several grants for small business startups by supporting them with equity-less funds. So, if you are looking for funding sources that do not demand equity in return, then government funding for startups will be the best option for you. Ensure that you plan to apply for these sources to have funds months before starting your startup. It may involve a considerable amount of time to gain the desired funds for your startup.

7. Bootstrapping

Bootstrapping is a funding method in which you fund your startup with your resources and funds. Your startup will be independent of any external funding sources, debts, and high-interest repayment rates or high-equity rates in this funding method. It is a favourable funding method to support your startup without giving limited or considerable control to the investors.

8. Incubators

Startup incubators are effective methods to raise funds and support a startup for a successful venture. They are a non-profit organisation run by private and public groups that helps startups regarding different milestones such as providing workplace, funding, training, and guidance.

9. Accelerators

Startup accelerators aids startups in hunting legit funding sources and organising accelerator events to motivate and guide startups on various topics. They are also known as seed accelerators or cohort-based programs focused on mentoring and helping startups succeed in the marketplace.

10. Venture Capital Investors

Venture capital investors is a pool of investors that seek to invest in startups that exhibit long-term growth potential. These types of investors, banks, institutions are usually well-off and wealthy that are adept at taking high-risk on potential startup or small business ventures. They provide guidance and monetary help to the startups, and in return, they seek equity or partnership in the business.

Bottom Line

For those looking for ideas on how to get investors for startups or where to get startup funding, this article must have helped with some genuine and smoothest sources for raising funds for your startups. So, based on your financial aid approach and plan out for the best suitable funding source for your startup.

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FAQs

Q. How to get investors for a startup?

Ans. Getting investors is indeed a tough nut to crack; there are several sources for startup funding, beginning from angel investors to government funding, small business loans to family loans, bootstrapping to crowdfunding - the options are too many. Choose the most comfortable and convenient option based on your funding requirements.

Q. How to find angel investors for startups?

Ans. You can find the angel investors for your startup by following the four easy steps:

Researching for the apt angel investor based on your business niche
Making a catchy pitch with an impressive presentation
Exhibiting the benefits to invest in your venture
Keeping yourself up-to-date with the latest market trends of your business niche

Q. How to get startup funding?

Ans. You can get startup funding using two ways: trading money for equity or trading money for debts. If you want to trade cash for equity, you can find angel investors for your startup. If you would like to trade money for debts, you may approach direct or indirect money lenders to raise funds for a startup.

Q. Where to get startup funding?

Ans. You can get funds for your startups from many sources, such as savings, loans, and crowdfunding. There are small business loans offered by banks and government fundings for small and mid-scale business among some of the best options.