Financial assistance for start-ups in India
To start a business, one of the very crucial thing needed is capital. From starting up to hiring employees to expanding the business, the financial support is the lifeline. There are lots many ways to get funds for a start-up and it varies with countries. As for India, in the past 10 years the start-up industry has boomed thanks to the government’s numerable beneficiary schemes.
Typical ways of funding:
- Seed Funding- According to Investopedia, seed funding means the initial funding to start business. Generally seed funding comes from founders’ own pockets or from family or friends. Although the investing money is usually less as the business is still relatively at the conceptual stage.
- Angel Funding- Angel funding is quite similar to that of seed funding where the investor invests on small start-ups or on a one-time basis or to help the start-up through difficult times.
- Bootstrapping- Bootstrap funding is where an entrepreneur starts a business with very little capital. An entrepreneur Bootstraps or stretches resources to build a company from personal capital and not depending on outside funding.
- Elevator pitch- It is an interesting kind of approach. It generally means an entrepreneur’s ability to convince an investor that the business idea of his/her is worth investing in. But this convincing part has to be done very quickly like the time span of an elevator ride of not more than a minute.
- Loans from banks- You can get loans from commercial banks to start your enterprise. The loans however vary from small to heftier of amount and also, short term or longer term loans. Usually, the loans are given on the basis of the respective project and are secured by mortgage through personal belongings or company shares etc. Although banks and financial institutions provide 80% to 90% of the loans. Small Industries Development Bank of India (SIDBI) is such one such financial intuition which has been helping micro, small and medium enterprises to develop and grow.
- Central government’s beneficiary schemes- In April, 2015 finance minister Arun Jaitley launched the much awaited India Aspiration Fund with an initial amount of Rs. 2,000 crore which would boost up the already booming start-up ecosystem of India. IAF is managed by SIDBI for the development of MSME sector.
- Private funding agencies/portals- There are many private funding agencies or portals which financially support a start-up enterprise to develop. venturefund.com, www.seedfund.in, www.blueventures.com, www.investmentnetwork.in, www.indianangelnetwork.in etc help start-ups with early stages of funding.
- Others- Non-Resident Indians (NRIs), Foreign Institutional Investors (FIIs) and Persons of Indian Origin (PIOs) can invest in the primary and secondary capital markets in India through the Portfolio Investment Scheme (PIS). FIIs/NRIs can obtain shares of Indian companies including start-ups through the stock exchanges in India under this scheme.