If there can be a “Golden Age of Business”, this has to be it. In this globalized 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 first part of a two part guide on raising capital for start-ups:
- Celebrity or a Renowned person in your Industry
A sizable amount of experience (4-5 years) in the concerned industry, substantial amount of research, and a well formulated business plan can get you attention from a celebrity funder. Their enthusiasm for the business and your relationship with them; will take care of the rest.
2. Funding through Employees
If you are forward thinking and are able to weave together close knit teams that operate well together, grow together, and rarely ever leave: you’ve surely won over your employee base. A talented and fairly young employee base, and creating company capability to buy employee stock; are other necessities for this.
3. Angel Investors from Abroad
This one requires focussing on understanding the sensibilities of foreign based business giants. Immaculately thorough paperwork, highly impressive presentation skills, and ability to convince many investors in a relatively short period of time; are the only things that even guarantee you a real shot.
4. Friendly Angel investors from India
This one starts with finding the right medium to connect to these investors. A good business idea can get you their interest. You’ll have to be ready to face the challenges and pressure constantly mounted by them; because of the peculiar business conditions in India.
5. Funding through your Dad
This might seem like a very obvious one, but it is complicated because of the personal element. Basic requirements are passion and confidence in your idea, and understanding the practical repercussions of both success and failure. A detailed and thorough explanation of the business idea always helps.
6. Funding through your other businesses
Self-introspection with regards to understanding the risks involved is the first step here. A fool-proof analysis of the earnings from ongoing businesses, and the share of funds available for investment into the new business: is vital. Patience and a practical vision go a long way with this method.
7. Selling Existing Property
Courage is the first requirement here: because parting with your property when the future is uncertain is emotionally draining. Initial success with the start-up, a property matching your requirement, and mental readiness to manage without the property; are the other requirements.
8. A Structured Term Loan
Reputable product line, capital centric & dependable project, and full-bodied business plan will get you noticed. Adequate margin money is required as your contribution. You also need to get a sufficient cash credit limit from the financial institution.
9. Funding through Multiple Friends
This too is complicated because of the heightened personal element. The trust and faith of your close friends and a clear business idea are basic necessities here. The determination with which you use these existent resources to achieve business targets decides the results of this method.
10. Temporary Activities to Fund the Core Activity
First, you need a high-output temporary activity for this. Your team should be exceptional at managing time and finances. The ability and wisdom to focus on & find balance between the temporary activity and core activity- will assist in acing this method.