4 things to know before you Raise Money for your Start-Up

4 things to know before you Raise Money for your Start-Up

Sep 11, 2019 lawyer by admin

There is more to your start-up than raising funds. Entrepreneurs today are under immense pressure to raise money for their startup, that, they often end up loosing out on the business. Raising start-up capital has erroneously become the parameter of success of business. Instead, Entrepreneurs should focus on growing business and make it lucrative,  whereby getting investors for your start-up would not seem as challenging. 

Start-ups should raise capital from investors, only, when other alternative means of  acquiring money have been exhausted. Here are few ways in which you can resolve the cash crunch issue without really giving out on equity of your start-up. Approaching investors in early stage of the company, could mean shelling out on too much equity. You may be left with nothing layer. 

  1. BOOTSTRAPPING: There is no better way of growing your company, than bootstrapping. Bootstrapping is when founders invest their own money and also retain equity. Bootstrapping can lead to slow growth, but, the investors who will join you later, will give you a brownie point for this. Investing your own money, proves, that, you are confident about your product and you have your skin in the game. 
  2. BANK LOANS: Here, you won’t shell out on equity and will again prove your point to the investors. You have taken the risk of securing a loan, which means you know what you are up to and are accountable for your decisions. Bank loans could be difficult to secure without a collateral or security, but there are lot of banks now venturing in the Start-up Space to offer loan without collaterals. 
  3. GOVERNMENT FUNDING: We know the bureaucracy can be an impediment. But, now there are multiple options where you cans secure funding in form of debt from government organizations. There are several Incubation Centers where young and efficient start- ups can get access to mentors, investors and sector experts. No harm in exploring! 
  4. Friends and Family: A soft loan from friends and family to create a prototype can be a super solution. It may create some emotional pressure, maybe, but, all that a founder should be worried about is saving equity in the early stages. You are an Entrepreneur , because you can handle anything and Equity is your love. 

Explore all these options, before you set out to find investors for your start-up business. 


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