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What are Extraordinary Ways to Fund Innovative Startup Business?

Updated on May 4, 2020
PrateekJain24 profile image

Prateek is a banking professional who verifies and disburse loans to small and medium enterprises to helping them to grow their businesses.

Introduction

Start-ups have become very common nowadays, which has great influence among youngsters. In stable market conditions, it is always beneficial to commence the start-up. There exists a great opportunity for aspiring minds who have the capacity to make their own brand. Therefore, with proper planning and adequate financial resources, you can start your business in such a manner that it will definitely grow up and expand in future.

Funding and fund-raising are the fundamental activity of any start-ups. The funding works in a 3 series i.e, in the series of A, B, C rounds. This series of funding involves different sets of investors at different phases of business conditions. Series A, B and C round of investment vary in time.

Today there are many entrepreneurs who want to launch their start-ups but they usually lack the required capital funds. So here in this article, I will share some relevant sources to raise funds for establishing start-ups successfully.

1. The CrowdFunding System

The conceptual framework of CrowdFunding Systems is similar to Mutual Fund investments. Under this system, investors invest in a business based upon crucial factors such as purpose to utilise the funds and descriptive allocation of funds by the organisation. If the business style is unique then, in that case, investors easily get attracted to invest in businesses with distinctive ideas and innovation.

There are many powerful players in the industry who are keen to invest in new business. Hence this system is gaining popularity on a very large scale day by day and helping in gathering funds right from the beginning. Here funds can also be raised from family, friends, and relatives, who believe there is some advantage to them from investing.

2. The Bootstrapping

Bootstrapping also known as self-funding is a very popular source of raising funds among various modern methods. In order to attract new investors to invest in the unique business model, it is necessary to build their trust in the business strategy.

Over time when the business starts to expand, it will ultimately lead to high profits. Hence this will attract more and more investors to invest in lucrative business ideas. By viewing the progress in a start-up business, investors will be attracted to invest in further schemes.

Bootstrapping is excellent when the initial funding requirement is small. This gives you the liberty to be your own boss. Managing funds under this option is very easy as there is no requirement of reporting to a superior and also there is no division of authority. Revenue and expenses will be personally monitored and controlled by the entrepreneurs who fund the idea.

3. Venture Capitalists

If your notion has the potential to grow and generate higher profits in future then you can approach venture capitalists. They are well-versed in managing funds and guiding entrepreneurs. Venture Capitalists assist to start business activities through consistent monitoring and deep analysis using modern strategies.

Until the new establishment launches its IPO, venture capitalists continue to support the new business. Once the company launches its IPO to raise funds from the secondary market they leave them. Basically, they aid in the first line of investment as well as in their management. Subsequently, once the business is set up and starts flourishing, they remove their involvement. Before planning to approach venture capitalists, one must know that they demand high flexibility so that they can monitor every business activity closely.

4. Angel Investment

Angel investment consists of a group of investors interested to fund the new business or innovative idea. Some high net worth investors assist small businesses or start-up to grow and expand their market capitalisation. Investors fund businesses without any commitment to returns on investment. Hence, in case the business fails to generate profits or incur any loss, no obligation will arise for capital repayment by the owners.

Passionate business Entrepreneurs, Doctors, Lawyers, Chartered Accountants or other professionals could be the angel investors. They are regarded as mentors for start-ups and also most of them have worked in top companies as an experienced executive officer. Hence their guidance and advice are very crucial for startup growth and development.

Google, Yahoo and Alibaba are some big companies whose business is grown as a result of the angel investment approach opted by them. It benefited them a lot by taking support from angel investment agencies at their initial stages.

How to Manage Startup for Assured Success?

The first and foremost questions that arise in people's mind is whether the startup will succeed or not? How to grow the startup idea efficiently? Here are some important ideas which guide me to measure the success rate.

1. Develop a Clear Strategy For Your Action

It is important to make a proper blueprint of all the activities that need to be undertaken so as to achieve select targets and objectives. Considering all the internal and external factors during the planning phase is a primary duty. The external factors include technology advancement, social influence, political policies, weather forecasting, and legal restrictions. Internal factors include human resources, organization goodwill, and corporate culture. In-depth evaluation of these factors is compulsory before proceeding further.

2. Be Consumer Visible Into the Market

Your products or services should be noticed by the end-user as soon as they are launched. If your product meets the customer satisfaction level then they will definitely buy it. Also, it will be spread to many people through Social Media influence as well as by Word of Mouth. Consumers have a habit of sharing reviews about goods used and services availed, so always make your goods and services from a customer comfort viewpoint.

3. Generate Debt Free Cash Inflows

At the initial level, there shouldn't be an instant profit or progress in the business. Having the patience to wait for revenue generation from the business activity is a wise decision. In order to capture a significant position in the industry, there should be a robust mission and vision statement of an organisation. Small and continuous demand will result in cash inflows, which ultimately motivate entrepreneurs to keep going with their mission strategy and encourages them to expand the product line horizontally or vertically.

4. Formulate a Powerful Team

Every organisation should follow both concepts i.e. being customer-centric as well as employees-centric. At the initial stage of the business cycle, you should build a strong team spirit among employees by motivating them through various motivational techniques.

When employees work in the team their efficiency as well as productivity increases. They must have the rights to participate in the decision-making process by sharing their knowledge and opinion over the matters. This will lead to a sense of belongingness among them. If decision-making rights are not granted to employees at their levels then waiting for approvals will consume a lot of time that will hamper the organisation's goodwill. Ultimately business growth is only possible by devotion and support by their employee and workers.

Conclusion

All methods that are discussed above are modern and effective. You can opt for any method or combination of two to raise funds. Hence before choosing any of them, you should consider their advantages and disadvantages.

If you adhere to the ideas mentioned above appropriately then you are good to go. Don't worry about your business progress so early, just keep following the above tips. Keep everything under monitoring and update the processes and technology when observed that they are getting traditional or obsolete. Although slowly and steadily you will surely achieve success. Remember successful business start-ups generate profits in the long term. Hence work with a wider perspective and vision to achieve higher targets.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2020 Prateek Jain

Comments

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    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      11 months ago from Madhya Pradesh, India

      That's really great mam. I haven't seen that show all Shark tank. But I am sure that there are many investors hu you like to invest in new and innovative idea and therefore they evaluate and analyse the potential of their idea in order to invest substantial amount to the startup. Thank you for giving time to read and comment on my article. Keep reading and sharing your feedback. Thank you.

    • Peggy W profile image

      Peggy Woods 

      11 months ago from Houston, Texas

      Many small businesses get their start in some of these manners. I am not sure whether you can view the television show called "Shark Tank," but I enjoy watching it. Private investors, if they like the sound of the business venture presented to them, will often fund the business taking it to a new level. It is fun to see what they do like as well as what they do not like.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      11 months ago from Madhya Pradesh, India

      Thank you Suchi mam for reading and commenting on this article. There are several ways to finance for your startup business. I have mentioned some important and effective ways in this article. I really appreciate your consistency in reading my articles. I am really honoured with your support and encouragement.

    • Suchismita pradhan profile image

      Suchismita Pradhan 

      12 months ago from India

      Thanks for this interesting article,I knew about venture capital fund other 3 are new to me.It sounds interesting that so many options are available for the newbies to grab the market if they have a proper strategy this gods can pour their pot of money to the needy with a profit share of course but still its doable.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      12 months ago from Madhya Pradesh, India

      Thank you Simran for your lovely feedback. I appreciate your appreciation and acknowledging the efforts. I am happy that you find this information interesting. My efforts for writing this article is only to help many young and innovative minds to launch a successful startup. There is a high demand of innovation in india hence startup which are coming up with some unique idea will always be appreciated.

    • profile image

      Simran Malhotra 

      12 months ago

      I found this article very useful for aspiring and talented youth who wants to launch their start up but lacks funds to initiate it. You had made great efforts to explain all modern methods to raise funds easily and effectively. Also various tips suggested by you to ensure success and growth in start ups will definitely help many entrepreneurs. It's knowledgable and interesting article. Thanks for sharing such a amazing article.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      12 months ago from Madhya Pradesh, India

      Thank you Nikhil brother your encouraging words. I really appreciate your consistency to read and comment the articles. I am also from a commerce background. I like reading accounts, management, and law. Also, being in a bank i often come accross these things such as finding for small and medium businesses enterprise. That's why i written this article to share the complete process with everyone.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      12 months ago from Madhya Pradesh, India

      Thank you Nikhil brother your encouraging words. I really appreciate your consistency to read and comment the articles. I am also from a commerce background. I like reading accounts, management, and law. Also, being in a bank i often come accross these things such as finding for small and medium businesses enterprise. That's why i written this article to share the complete process with everyone.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      12 months ago from Madhya Pradesh, India

      Thank you Ekktha mam, your word of appreciation means a lot to me. I am surprised to have such a wonderful compliment from you. Please keep reading and exploring more articles.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      12 months ago from Madhya Pradesh, India

      Hello Krishna sir. Definitely nationalized banks are now providing these loans and financial support to small and medium enterprises. As per banking regulation act it is mandatory for banks to make their major lending to small and medium enterprises for their advancement and growth. Also, particularly venture capitalists, and angle investment are seprate association. They provide the financial assistance service by their own.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      12 months ago from Madhya Pradesh, India

      Thank you Akash for your valuable opinion. In today's economy it is advisable to take due care whole setting up an startup business. However india is a developing country and due to its economy is rising there is vast opportunities for young and brilliant minds to setup their innovative Startup business.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      12 months ago from Madhya Pradesh, India

      Hi Natasha mam, thank you for reading and giving your valuable feedback on this article. Will share more investment tips in our future articles. Stay tuned for more. I am happy that you like this article.

    • sachnikh profile image

      Nikhil Sharma 

      12 months ago from India

      I'm from a commerce background, and I really loved reading and learning everything related to business and economics. You'v explained all these new terms to me in a very simple-to-understand language. In the coming times, I'd be happy to have a start-up. And for raising funds, I'll definitely look up to your article and get consultation from you. Very good article Prateek.

      Please keep sharing such insightful details about the banking and related subjects or fields.

    • profile image

      Kota shashidhar Reddy 

      12 months ago

      Keep up this good work

    • hmkrishna profile image

      Halemane Muralikrishna 

      12 months ago from South India

      Very useful article for entrepreneurs. For me all these are new. Whether these are there in our Indian Nationalised Banks? Very informative indeed, Mr Prateek.

    • Ekktha Raawal profile image

      Ekktha Raawal 

      12 months ago from Indore, India

      This article is freaking awesome! Just brilliant for anyone who wants to understand the basics of funding and planning to raise funds for their startup. The best part is it is easy to understand and has a lot of clarity. Pl do write more articles on start ups and funding. Also liked the way you explained how the enterprenuers should go about managing their start up. Excellent!

    • AndazeAkash profile image

      AndazeAkash 

      12 months ago

      Startup is a need of today's era and of course a way of generating more money too. Apart from crowd funding, you explain many ways in a very effective manner. A nice one.

    • Natasha Tungare profile image

      Natasha Tungare 

      12 months ago from India

      I had completely zero knowledge about investment ways. This is really a nice article! I will need to refer it more number of times so as to get acquainted with all these ways! Really a valuable one!

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