If there can be a “Golden Age of Business”, this has to be it. In this globalised era, visionary companies have limitless potential because: the entire world is practically their oyster. But starting and running a business is not a walk in the park. Amongst the many challenges that businessmen face; raising capital to get their company going is the biggest hurdle they face in the beginning.
Here is the Second part of a two part guide on raising capital for start-ups:
- College Alumni
A great relationship with your alumni network will get you their attention. Highly enthusiastic pitching and a mind blowing vision should get you their approval. It helps if you possess a shared sense of pride for your alma mater. You can use it to convince them in the pitch.
2. A blend of Angel Investors and VC funding
High financial and management acumen are vital for this. You need to be thorough in predicting and managing extra costs like the legal and accounting fees you pay irrespective of funding approval. You should be ready to agree to certain limitations that they will ask of you.
3. Funding through Family Business
India is the home of joint families who’re into Business. Amount of convincing depends on how close your proposed business is to the family business. You also need to be very good at winning their approval to go ahead. All the necessary statistics should be crystal clear as well.
4. Small Investors: Convertible Debt
This is an investment that converts into equity in the future usually at a discount to your next funding round price and sometimes has a “cap”. You need a highly impressive business growth strategy and great networking for this. The stamina to last many reps of pitching is also vital.
5. Personal Savings
This largely depends on your habit of saving. You need a great personal survival plan to make it through the initial tough phase. Cost planning should be very thorough and practical. Just make sure to use every dime in the most productive manner.
6. Request to criteria based venture capitalists to own stake as a Director
You need a good grasp of equity financing and debt financing for this. You also need to be sure about why, how much, when, and from whom you need funding. A realistic approach needs to be applied at every step. A strong exit plan for investors would seal the deal.
7. Loan against property
The key here is to know which financing institution to go to. Big banks don’t entertain such ideas. Go to smaller co-operative banks instead. A calculated risk taking ability, serious passion for both business & business idea, and terrific guts are core necessities for this.
8. Funding through your Employer
This works well if your vision is to establish a business allied to your employers business. A genius idea that will for sure get them on board is a prerequisite. You should be ready to share revenues with them. Since the investors are experienced in the field, their suggestions might seem like impositions.
9. Initial funding from HNIs
This kind of funding suits businesses that have relatively new concepts and execution ideas. Get investors hooked on the pre-revenue level. Be careful as to not give away a large part of your company, or making a habit out of this kind of funding. Focus on growing the idea more than anything else.
10. Incubator Funding
This suits start-ups that are just in the early stages of development and have a small team. You will be required to work for a few months at the incubators location; which could mean shifting base temporarily. If you need to facilitate your basics in the initial phase, and are in need of industry mentors; this is for you.
