5. Fund Raising Techniques

Finding Capital Investment

A start up can’t be made possible only with ideas and plans. It definitely has a monitory side and is most crucial one. Opportunities can be found from your surroundings but you must be with a sharp and clear vision about it. The process in availing fund in exact time and place is the brilliance!

Fund raising can be done in many ways like self investment, bank loans, angel investment, crowd funding, Government schemes, sponsoring from friends and relatives etc. The following details will give you an idea about different types of fundraising techniques.

1. Boot Strapping: The self investment fund from your own savings is generally called as boot strapping. The possibility of an external investment will be very low in the primary stage of your project. Since you can’t promise much more until you are succeed in establishing a quality service or introducing a product, the investors from outside of your project may not be convinced only with an idea if it is a unique style of business then the possibility will be zero. In order to overcome the crisis you have to take the responsibility and invest from your savings that you already have or can be find from part time jobs from any other works after a few weeks or even months. Once you have it in your hand then, you can ignite your idea. The best advantage of boot strapping is that you need not to answer to anyone or to handover the steering. You must consider your time, work, computer and social media platforms as the primary investment and keep believe in yourself to strive forward bravely. This will definitely boost up your ability to interface with a possible breakdown ahead in case.

2. Close by investments: If you need a push soon after boot strapping fund, ask to them those who are in the vicinity like family and friends for instance. And if they have done it, you can consider them as a share holder or partner and you will find a trusted ally in business also. They will be happy to be with you in sharing their valuable time and skills. The trust they kept upon your shoulder will make you braver, smarter and more confident in your journey.

3. Incubators and accelerators: The capital investment can be also from incubators and accelerators which are meant to nurture the startup projects. The possibilities will be more for those who are trained from the centre through ‘seed funding’ programs. The ‘seed fund’ is named as it is a primary shoot up. In some circumstances you can also find the seed funding apart from the incubators.

4. Competitions: Tech giants and corporate like Google, Face book, Freelancer etc were used to conduct startup idea camps and competitions in several categories. You can check it out as an option and will give you a wider platform to present your idea in front of the whole world. The price money or angel investment will be enough to establish your platform in a decent way without depending upon others.

5. Crowd Funding: The fund raised in small amount and collected from a large number of people is called as crowd funding. In this method the public may not be familiar to the entrepreneur. This strategy is generally effective in online platform where you have to submit a detailed business plan, possibilities and challenges and breakeven point and also clarify the circumstances that can be lead to a loss in detailed post. If you can market your idea effectively, people will scrutinize the chances of profit and loss and convinced may ready to invest. Once you have enough to get a start you should have the responsibility to stop the campaign not only because of your success but also for those who are waiting for a chance after you. You can choose the investment as money or shares. The startup projects with a concern over social issues had a wide reach. A few can offer you their service or products as an investment. Reliability is very important in Crowd funding projects. The investor can promote your business very much if you can sustain the relationship and can give you some extra mile.

6. Angel Investors: They are the real angels of entrepreneurs in a needy situation. They will offer a hand of help at the developing stages of your projects. There are several online platforms available by today that will help you to find an “Angel”. Linked In has a better platform as compared to other social media in this regard. Celebrities from film industry, business houses, reputed investors and even techies are also very much interested in investing in startup projects. You can either approach them directly or through a social media community easily.

7. Government Schemes: Government has launched several schemes for the promotion of quality projects from startups. They can give you a better support in various stage of development. The aid will be sanctioned in various stages of development but you can trust them as it is from the government. Information and guidance will be given by industrial promotion department, youth empowerment schemes, local governing bodies etc. The industrial estates are also available in different areas with all facilities.

8. Venture capital funding: Apart from the all the other mode of fund raising the venture capital investment is done after the successful marketing of your project. They are monitored by SEBI and usually invest for 3-5 years by considering the return from the shares. The investment from VC fund is not ‘seed funding’ to start a project but to get a return from a successful startup company shares. You can find the list of VC companies from the websites of SEBI (sebi.gov.in), startup India (startupindia.gov.in) also.

9. Private equity: Private Equity funds are also not ‘seed fund’ for startup projects. PE investors are interested in startup projects that have a proven track record and a best in class business models. You can Approach them over a period when you are realized that you project has enough potential to grow up over the horizon after a stable stage. PE fund is commonly supportive in certain circumstances of expansion of a project, selling of certain shares or all shares etc. PE companies can even takeover a whole project if it really worth for it!! Remember the “Flipkart” and “Whatsapp” stories.

10. IPO- initial public offer: When a startup decides to raise funds from the public including institutional investors as well as individuals, by selling its shares, it is known as an IPO (Initial Public Offering). IPO is commonly related to ‘going public’ as the general public now wants to invest in your company by buying shares. It’s not an obligation for the founders to disclose their financial statements before public if they go for an IPO. But the company must submit information related to financial statements, the purpose of raising funds, etc. to the SEBI. IPO basically helps you grow and diversify in areas of choice.

For taking your startup to the next level, you should know which stage of funding you want to go for, for what purpose. Such decisions made at the right time can be boon for your business.