5 IDEAS TO RAISE FUNDS FOR STARTUPS

Starting a business requires lots of effort, time, and money to be invested initially to ensure it works. Many hurdles need to be overcome. It often becomes difficult for entrepreneurs to raise money, especially in the initial stages of the business.

5 IDEAS TO RAISE FUNDS FOR STARTUPS

Here are 5 ideas to raise money for startups. 

• Bank Loans 

One of the basic options that almost every businessman relies upon is bank loans. Banks charge a nominal rate of interest based on the amount borrowed to fund the business. To be eligible for bank loans, you must acquire some valuable asset in the form of land, buildings, etc, which can be mortgaged. Banks also offer overdraft limits, credit cards, etc., which can be used as business funds. 

• Angel Investment 

As the name suggests, angel investors are like angels ready to invest in your business. The business usually relies upon these when no other funding option is viable. Angel investors invest money in your business in exchange for equity or control. These investors often invest in similar industries that they feel are profitable. 

• Government schemes

Worldwide economies are focused towards promoting entrepreneurship. Government policies in many nations are framed to support the setting up of new businesses. The government has eased the setting up of start-ups by liberalising the rules and regulations, promoting and maintaining market competition, and assisting these startups in many operations such as finance, sales, marketing and others. The government provides finance to startups without mortgaging any valuable assets and also includes grace periods for these startups to repay their loans and taxes. 

• Venture Capitals 

Venture capitalists are the people ready to invest in your business if they see an opportunity and potential growth in your business in monetary terms. They invest by way of acquiring equity, i.e. shares, voting rights, or as directors. The chances of startups receiving funds from venture capital could be higher. Venture capitalists only invest in selective businesses where they are sure about high returns. 

• Crowdfunding 

Crowdfunding refers to raising small amounts of money from many people over the internet. There are platforms built specifically for crowdfunding. Here, you receive investments from investors, which can also be anonymous. All you need to do is put in a perfect pitch and attract the investors. 

There are many ways for businesses to raise capital. What matters is choosing the best alternative for raising funds for your business. Funds play an important role in every industry. Therefore, it is essential that before considering any option, you briefly understand the pros and cons of it to your business.