Other than the cumbersome task of complying with all the legal requirements of incorporation, another significant area of startups is raising of funds both to start the business and to operate it. Your brilliant idea is, of course, the key element but without these two pillars, your idea is just an idea. According to a recent study, 94% of new businesses fail during the first year of operation due to insufficient funds. Money is the bloodline of any business and so, after an in-depth research involving some of the top postgraduate and undergraduate colleges in Delhi, we have come up with a few tips on the procedure you can adopt, in order to procure more funds for your business.
Bootstrapping your business:
Every successful business was once a start-up and in order to succeed in your first time, you need to ensure that there are some saved up funds available with you or those that can be obtained from your friends and family. This process of investing in personal funds in your business is known as bootstrapping or self-funding.
This modern era of globalization and digitization has made it easier to reach out to people and share our problems on an interactive social media platform. Crowd-funding platforms are basically a set up for potential entrepreneurs where they can pitch their business ideas to investors who are willing to invest in brilliant minds.
BBA colleges in Delhi NCR and other cities reckon that the term seed-funding came from the analogy of planting a tree with the help of a seed, where the tree is considered as a business and the seed is the funds required. It is based on the ideology of investing in the early stages of a start-up when the business is still just an idea. These funds are raised to support market research and development of the company. Seed-funding is also known by the pseudonym ‘incubation’.
Angel investors, as the name suggests, are basically people who have a lot of capital available with them and are willing to invest it on any potential entrepreneur. Angel funds are defined by SEBI “as a sub-category of Venture Capital Fund under Category I- Alternative Investment Fund that raises funds from angel investors and invests in accordance with SEBI (AIF) regulations.” Angel investors come in groups to scrutinize the business proposals. Their supreme knowledge and experience open up a lot of opportunities for the newbie entrepreneurs to earn more money, develop their management and entrepreneur skills, gain better insights, etc.
Banking institutions often provide financial aid, in the form of the loan, to people with a solid business plan. In order to get the loan sanctioned, a well-structured business plan should be pitched to convey the modus operandi, profit forecast and estimated time of maturity.