India is a country that lies in the third-largest ecosystem of startups in the whole world, which is 20 times higher than in the past 10 years. In India, almost 15000 new startups are to be registered, says the economic survey, 2022.
First of all, You need to have a strong and useful plan. The more innovative your plan is, the better!
Eligibility criteria to get funding or loans for your startups registered with DPIIT (Department for Promotion of Industry and Internal Trade)
You have to register as a Private Limited Company or Limited Liability Partnership or Registered Partnership. The company is not to be registered for more than 10 years. and your company is not supposed to be formed by splitting up or reconstruction. company’s annual turnover should not have crossed 100 crores in the past years. Your idea for your business should be scalable and should create more employment.
Modes of funding
Personal Savings- To start any business you should have some initial savings. The least savings should be manageable for 10-15 months. Pouring your own money into business would keep you enthusiastic to focus and work.
Friends/Family- You can take your relatives’ help in funding. They won’t load you with the pressure of returning interest.
Co-founders- Just like you’re investing your personal money, your co-founders might be ready to do the same.
Seed fund- It’s funding or capital which is relatively a small investment that is used to start a business or to carry it forward. This could be done by friends, family, peer-to-peer lending, etc.
Crowd Funding- It is a process of raising funds by a relatively large no. of people to invest in your company. This could be of two types- Loan-based– In this, investors get their money back with interest. And, Investment-based– In this, investors get some equity in the company and they could see their value is whether getting higher or lower in the company as per their investments. It’s an easy way to gather money quickly without lots of documentation. Kickstarter, Wishberry, Milaap, Indiegogo, Fundable, CatapoooLt, etc. These are a few known websites where crowdfunding takes place with safety and security.
Accelerators and Incubators – It’s an organization that helps in the growth of start-ups. They promote the ideas for innovation through funds, mentorship, scholarships, and several support. They are involved with you and they make sure of your growth but they also take equity in your investment for their further profit. But you need to have a valuable plan for the market, only then any accelerators or incubators will invest in your firm.
Bank loans- This is the safest. There are several schemes that are launched by the government of India because of the high rise of startups. And to encourage and support them, the government has launched StartUp India Seed Fund Scheme in 2022. Through which they permit 300 incubators to grant help and support 3600 entrepreneurs to grow their start-ups.
Foreign Direct Investment– It’s an investment made by a company or an individual in any company which is located in any other country. It is done for business purposes only. There are two routes involved in this Automatic Route- Through this, you can automatically get funding from any company without any approval documentation by RBI but Government Route requires all the proper documentation of the approval.
External Commercial Borrowing– It’s an instrument or a process that helps the companies of India to raise funds and loans from outside India but in foreign currencies. It is legal in India to raise ESB by startups but under an automatic route and only upto 3 million for the average period of 3 years.
What should you do to make any investor invest in your firm
Show them how your idea is so unique, useful, and impactful. how strong & focused your team members are. Show them your plan of utilization of funds. How well you are going to use their money makes a great impact. By the government of India, you could get grants & loans of 20 lakhs to up to 50 lakhs through the scheme Seed Fund. But your company needs to be registered by DPIIT and also should not be older than 2 years and there are also a few other requirements that you need to follow.
