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Top 10 Funding Options To Raise Startup Capital For Your Business

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Freshworks, Billdesk, Swiggy, Paytm, Policybazaar, MakeMyTrip, and Byju’s –  The names of some popular Indian brands that you are well-aware of and might be using right now.

Well, these are not mere mobile applications that you prefer for your payment or food delivery. Rather, they are successfully-running business “startups” that are making a shift in the paradigm of viewing routine career.

But what’s so unique about these brands is that the heads and CEOs of these companies are not another ‘born-Albert Einstein’ or a person who has 38+ years of experience in the corporate world. They are young Indian minds who put their time, dedication and persistence to start something new, who are well-heeled by money, fame and personality today by these brands!

The 27-years-old founder and CEO of ‘OYO’ rooms ‘Ritesh Agarwal’ says “Start Small, Nail it and then Make it Big!”
Startup Ecosystem - Top 10 Funding Options To Raise Startup Capital For Your Business

Having a startup plan and generating revenue, is one big dream for many young entrepreneurs and MBA scholars. Yet, more than half the business domains flopping in the 1st year of entrepreneurship is the harsh reality. But…

On a positive note, now is a good time to invest your intelligence and patience for a business startup, by raising capital! If not compromised, then check this out:

  • India’s position in the ‘startup ecosystem’ is 3rd globally, succeeding China and the United States of America!
  • Did you know that ‘Bengaluru’ is the 3rd best city for opening a startup in this entire world?
  • As per the “Global Innovation Index”, India stands in the 57th position!

India Startup Funding Graph - Top 10 Funding Options To Raise Startup Capital For Your BusinessImage Source – Yourstory

No wonder that India added 1200+ startups ONLY in 2018. Apart from starting a business from Delhi, Bengaluru, and Mumbai, the scopes have extended to regions including Pune, Hyderabad, Chandigarh, Karnataka, Jaipur, Kerala, Indore, Chennai, and more.

It is estimated that the Median age of Indian startup founders is around 31 years. If they can impact us, then why can’t you?

Image Source – Inc42

The Basic Ingredient to ANY business recipe is CAPITAL – Raise Startup Capital

Regardless of what, where, how and why you are opening a startup, you should consider spending some cash as capital.

If you are motivated to open a startup or prepare yourself to invest in the right platform for your brand new venture, then the following top 10 funding options will help you to raise the startup capital your business needs.

#1. Bootstrap your startup:

Are you a person who has a lot of friends, family members, relatives and external circles? Then try sharing your business vision to them. The idea is to raise capital all by yourself without seeking assistance from other venture partners or companies. Ask your close ones to contribute a certain amount of cash as your startup capital and assure them to repay the same, within quite a few months.

Image Source – Cloudways

Consider this option, only if your business startup requires a small amount of raised capital.

To state a few examples – HappyFox, Social Pilot, Quack Quack, Referral Yogi are some of the successful Indian brands today who have bootstrapped once as a startup. (and the founders of the startups are Young Indians!)

#2. Go for Crowdfunding:

You don’t have to ask money from someone to grow your business if crowdfunding is your aim. Crowdfunding goes by this way; say, that you’re starting a small-scale business for creative arts (painting, pottery, photography, embroidery, etc.). You will pitch your ideas and share the limitations, challenges, perks and other aspects of your idea in a crowdfunding platform.

Supposed if people like your views, they will donate income for your startup and pledge to support your creative dreams.

Go for Crowdfunding

The biggest advantage of crowdfunding is that even giant venture-capital investors can provide their source for your growth. But 1 major con of this method is that your business idea should be unique, powerful, user-friendly, and effective to use. Otherwise, competition is high!

Note that Donor-based or Reward-based crowdfunding is legal but equity-based donations are not possible at the moment, as per Indian norms.

#3. Locate a business Accelerator:

A business accelerator is someone who will give access to raising funds for your startup idea. They will help you in providing a certain sum of money and provide you with thorough mentorship in your stream. You will even get connections from other business partners from your industry.

Locate a business acceleratorImage Source – OverheadWatch

  • Kerala Startup Mission (KSUM) – Kerala
  • SRIJAN – Indore
  • International Centre For Entrepreneurship and Technology – Ahmedabad
  • Maker Village in Kerala, Center for Incubation and Business Acceleration (CIBA) – Goa

…are some of the notable business accelerators in and around India. Know that business acceleration is a slow process and don’t expect exceptional results in the 1st few months of your startup!

#4. Win Online Competitions:

Yes, something as simple as winning a contest can get your goodies and resources that can help in raising capital for your startup. There are plenty of online sites that host contests and programs for young entrepreneurs to win and excel. By joining and lending your business vision and mission, your startup can headstart with handsome capital!

Win online competitionsImage Source – Freepik

Remember that competition is high and do not lose motivation due to little failures.

Considering the other side of the coin, media coverage is present in the majority of the business contests. So, if you try and win, the chances of coverage, online reputation and publicity are huge here!

#5 An Angel will come to the rescue:

Angles are heavenly messengers from gods and they help us in our needs and deeds. Similarly, there are individuals called Angel Investors who will give money as startup capital, either as a 1-time opportunity or in regular investments.

The core of an Angel investor is to help your startup grow and nurture in its early stages. They will then get back their shares either in the form of convertible debts or take small ownership in some part of your startup.

So then, how can you approach an Angel Investor?

  • Create the main pitch for your startup.
  • Do practical demonstration using your product/service’s prototype.
  • Find an Angel Investor in India using Twitter or LinkedIn.
  • Present your views with confidence.
  • Sit back and wait for your results.

An angel will come to the rescueImage Source – Inc42

Let us peep into the life of an Indian who doesn’t look more than 40…

Once an executive assistant to the CEO of Dell is now the face of Google and the Managing Director for Silicon Valley’s marquee venture fund Sequoia Capita.

Rajan Anandan, Google India’s Former MB for South-East Asian Region is an active Angel Investor, who prefers investing with the startup ideas of Indian youngsters. Started with a few internet and software brands, his portfolio is now filled with names such as Unacademy, EasyGov, Mobilewalla, and more!

Today, he is also inspiring young Indian minds to achieve something productive in their startup community. He says, “Role models are crucial in India as they bring in a lot of energy!”

#6 No qualification for a bank loan?

There are cases where a person might have an effective business startup idea but lacks initial investment cash. He or she will approach banks (primarily) to apply and get loans. But banks might reject their qualification due to multiple causes including legal matters.

No qualification for a bank loan?Image Source – Analytics India Mag

However, then you can make use of Microfinance Providers to get loan capital, without any restrictions for your business qualification. ‘NABARD’ considered the idea of the Nobel Prize Winner of Bangladesh, ‘Muhammad Yunus’, and started this concept of Microfinancing in India.

The Top 5 Microfinance Providers of India are:

  • BSS Microfinance Pvt Ltd.
  • Arohan Financial Services Pvt Ltd.
  • Annapurna Microfinance Pvt Ltd.
  • Equitas Microfinance Pvt Ltd.
  • Disha Microfin Pvt Ltd.

Opportunities for Microfinancing is plenty in India with 3000+ NBFCs, MFIs and NGOs running to help startups with their initial capital.

Whatever platform you choose, have an eye on the interest rate and the eligibility criteria, as per the Indian government rules.

#7. Importance of picking a VC:

Of course, VC is not video call, rather something more big and useful – Venture Capitalists. They are agencies that run towards providing private startup minds with some venture capital for a successful opening. You should go with venture capitalists if you do not have proper access to expand your project with equity markets.

Importance of picking a vc

The only reason why many VCs fail lies in the fact that there are unproven companies that lack originality and take several years to generate initial revenue. But if your startup is a success, then VC will be the backbone of your business crown. In return, you can provide sufficient ROI or give a sizable share from your startup equity.

Below is a short inspirational journey about the life of a young Indian woman, who is now a Top-level entrepreneur and a fortune-maker, seated in the chair of a CEO at the age of 22….

“Kalaari Capital” started by ‘Vani Kola’ is one of the highly successful venture capital firms in India. She is awarded the ‘most powerful Indian businesswoman’ by Fortune India, for her excellence in venturing smart minds of India.

Her father was a government employee who reported to have said: We are not that kind of people.” And today, Myntra, Snapdeal, and startups like these are not possible without the works of Vani Kola!

One of her well-said quotes include “Having a Great Work Culture is not an option – it is a Necessity!”

BONUS: According to the Forbes Statista, Venture Capital is a good idea for startups related to technology, software, biotechnology, Media and entertainment. VC is not a good idea for startups based on personal liking such as pets, food, etc.


#8. Two Heads are Better than One:

As you might have guessed, having a partner for your startup is a good idea. The investment from your side plus your partner could be a proper way to raise capital. On the flip side, your revenue and other perks have to be shared equally with your partner; sometimes dislike, jealousy and other personal discomforts can turn your partnership into a business squabble.

Having a supportive and constructive partner is the key to a successful joint partnership business.

Two heads are better than oneImage Source – Executive Grapevine

One of the classic real-life examples for 2-heads better than 1 is from our favorite food application on your phone…..

Covering just 1 neighbourhood with 6 delivery executives, Nandan Reddy, Sriharsha Majety, and Rahul Jaimini started their journey of consumer deliverables from Koramangala. And today, with the help of key investors such as DST Global, Accel, Naspers, Bessemer Venture Partners, boasting 2.1 lakh active delivery partners and supporting services in more than 550 cities, “Swiggy” is our favourite go-to food delivery partner!

Your partner can both make or break a business startup, so pick wisely.

#9. Pre-launch your service or product:

A strategy followed by the International brand “Apple” pre-launching your product or service is the best way to gain some popularity and reviews from the public. Select 1 product/service from your startup that you feel might be worthy of buying .

Advertise, promote and market your goody through offline and online modes and create a sense of excitement in the people. This way, when your actual service or product is released, chances are likely that consumers will buy that goody!

Pre-launch your service or productImage Source – Optinmonster

For achieving this, go for social media marketing, email channelizing and connect with Influencers on Instagram. Similar to the “buy” button on web pages, this curiosity is a type of CTA (Call-To-Action). But remember to target the pain-point of every customer.

#10. Cut-off other initial expenses:

Some startups have failed due to lack of capital and spending more onto the initial costs of setting up the business. The basement for your business building is capital. You can never compromise on it for other expenses, hidden or direct.

So, save some bucks as the raising capital for your startup and cut-down the charges and costs that are indirectly required for your business (less important factors).

Do this by the following simple but effective ways:-

  1. Pay for your goods as you buy, instead of giving an upfront total payment.
  2. Using materials that are cost-effective (the “cheap and best” ones).
  3. Try using your initial capital for a longer-run than expected.

Moreover, you can think out-of-the-box. For instance, instead of paying money for a certain commodity, give your sample or business entity to the seller. This way, you are not only paying the owner but also doing indirect affiliation with your startup!

Cut-off other initial expensesImage Source – Vector Stock

Note that this trick does not work often and for all cases, so think before leaping.

So, have a clear vision and set realistic goals to achieve your startup dreams and turn your name into a brand. Put your fullest in everything you do.

As Indra Nooyi (the former CEO of Pepsi) says, “Whatever you do, throw yourself into it. Throw your head, heart and hands into it!”
Opening a startup is challenging but not impossible! Best wishes…

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