Q. What are various possible ways to finance startups in India?

There are mainly three possible ways to finance the funds for existing business or for a new business.

• Equity Financing
• Debt Financing
• Governmental Grant & Support

Equity Financing

Equity financing is a type of financing in which if you are startup a new business and wants to take a fund from an investor or lender. you have to share your business with an investor or lender. if any investors invest against the 40% share of your equity – this means the investor is the owner of 40% of your business.

There can be two types of Equity financing –

(i) Angel investors -:

Angel investors are a real-life angel for our business, they are always ready for funding in your business, if they shows trust in your product. In return, they demand ownership equity of your business or convertible debt.

(ii) Venture Capitalist/Private Equity -:

This is also a option for taking the large fund for our business through companies. Venture Capitalist are companies/funds that raise funds from various sources and use the corpus to further fund startups. They are ready to invest in small business, funding young, unproven companies that appear to have a great idea and great management team.

Debt Financing

Debt financing is also a type of giving financial service for your business or startups. They give funds for your startups over the debt from different financial institutes.

• The loan from Bank and NBFCs -: We can take a loan from the banks and non-banking financing companies (NBFCs).
• External Commercial Borrowing -: We can take a fund from the non-resident lenders.
• venture Debt -: It is also a type of debt financing provided to venture-backed companies by specialized banks or non-bank lenders to fund working capital or capital expenses, such as purchasing equipment.

Government Grant and Support

If you don’t want to invest your all funding, you can go for grants and loans available through different government schemes, such as Startup India scheme.

Startup India Scheme is an initiative of the Indian government scheme, the primary objective of which is the promotion of the startups, and generation of employment, and wealth creation.

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