“I want to put a ding in the universe,” said Steve Jobs.
Like him, today, many thinkers, innovators, entrepreneurs seek to make their mark in the world and bring about a social change. Some want to develop low-cost tools to enable a child to access education in the remotest corner of the world. Others may wish to empower the marginalised artisan communities to revive their traditions and start a business. Whatever the startup idea, it requires sufficient funding.
Unless you secretly have a fairy godmother or substantial lottery winnings, bootstrapping may not be enough, and you may need external investments to bring your idea to fruition. So, where do startups get the money to make their dreams a reality?
Here are four promising methods for raising funds for your startup:
Crowdfunding
Do you have a high potential plan of providing inexpensive and effective medical care in rural India? Or maybe an idea for an indie film? If you have a startup idea and believe that people will resonate with your vision, then rewards-based or debt-based crowdfunding are great ways to fund your work.
Crowdfunding for startups is becoming one of the most popular mediums of fundraising thanks to its broad reach. A potential donor in one part of the world can invest in your idea, provided legal compliances align. The best thing about startup crowdfunding is that you don’t need to pitch for significant amounts from a small number of potential investors or donors. There can be hundreds of donors who can make small contributions to help you raise the targeted amount.
Incubation programs
Many government institutions and private organisations run incubation programs that provide mentoring, networking opportunities, and seed funding for startups. In India, many state governments, educational institutes, and social enterprises provide incubation support to startups across fields such as agriculture, financial inclusion, and skilling. If you have a new solution to an old problem and a visionary pitch deck, these incubation programs may want to support you.
Venture capitalists
If ‘go big or go home’ is your idea of entrepreneurship, then venture capitalists are your go-to people for fundraising. Along with professionally managed funds, they will also offer their expertise and insight into making your business work.
Articulate your long-term goals, demonstrate your business model’s resilience, and highlight your team’s competence to get VCs interested. Typically, they will pull out of the business once you go public or are acquired by another company, but until then, your strong track record and potential will keep them invested in your dreams.
Angel investors
Angel investors usually come with an expectation of getting equity in the businesses they invest and earn high returns. There can be a single angel investor or multiple investors who believe that your idea can truly make a difference to the world. Be ready for numerous rounds of discussions and screenings before you get any angels investing in your startup.
Being an entrepreneur requires sharp acumen to raise funds and ensuring your business’ sustainability. Now that you have a fair idea of raising funds for startups to try different ways to get the funds you need and let your dream venture become a reality.
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