1.Do it On Your Own:
Because nothing is easier than emptying your own pockets first!
Before going around and asking people to invest in your business, look in your own account. Tap into your savings. Although it’s risky, it’s your best bet because it shows you are serious about your business and you won’t just run away with someone else’s money. This subconsciously lends a trust factor to your business.
Go on to bootstrap – fancy word for recycling your money. Every little rupee you make out of your initial investment goes right back in the business until you are comfortably profitable.
Here are a few tips to bootstrap easily:
- Share office space/work from home.
- Negotiate with suppliers and service providers to give you discounts.
- Use your own resources optimally.
- Hire local – interns and college students.
Remember to save big when you are doing it all on your own.
2.Your Immediate Circle:
You can request your immediate social circle – you friends, family and colleagues to invest in your business idea. This is an easy way because people close to you are more likely to believe in your vision. However, there is also a high risk of ruining personal relationships.
To avoid confusions, borrow limited amounts of money and ask your friends/colleagues to get legal advice to keep costs to a minimum should things go wrong.
You can also consider crowdfunding your idea. There are several online websites where you can pitch your idea. Investors decide to fund you in exchange for some sort of ownership in the business and expect a chunk of profit when you start making money.
Borrowing loans from banks have become easier today. In the latest budget, Finance Minister Arun Jaitley increased the lending limit to small businesses to 2.4 trillion! This is the best time to avail loans for your business.
You can approach the government to fund your idea. The government of India has introduced special schemes to finance small businesses.
Some non-profit organizations or NGOs also support small businesses financially.
4.Angel Investors & Venture Capitalists
Angel investors and VCs are very similar. Both are interested in investing in your business, both want a share of your business and profits in return. The only difference is, VCs also want a seat in your office – they want a seat in your board or have some managing rights in your company.
Angel investors need to be registered with the Securities Exchange Commission of India and need to have a net worth of at least Rs.20 Lakhs. You can look for Angel Investors at forums like Angellist and MicroVentures. VCs are usually large companies that are ready to fund you. Here is a list of famous VCs in India.
5.Incubators, Accelerators and Contests
Startup or small business incubators and accelerators are usually angels or VCs that seek to help a small business grow. Startups are admitted in small batches, 1-3 businesses in a year and are given funding + mentoring to help the business grow.
Incubators and accelerators are involved in every stage of the small business’ growth. However, the focus is on the first few years of growth.
While Accelerators don’t offer office space and other physical amenities to a startup, accelerators do.