startup-funding

Get started

Investment Bank is a financial institution that helps individuals, entities, or governments raise capital and provide financial consultancy services. They act as an intermediary between investors and companies/startups. An investment banker assists startups in raising funds to start their business and helps investors find opportunities for investment simultaneously. Apart from finding capital, it supports startups in preparing business plans and pitch decks and entering the gateway of the capital market. Let’s look at the top investment banking companies in India:

1. Axis Capital Limited:

Axis capital limited is one of the leading investment banks and equity houses in India. Earlier it was formerly known as Erstwhile Enam Securities Private Limited. Founded in 2005, and its headquarters in Mumbai. It was a wholly-owned subsidiary of Axis bank(the largest private sector bank). It aims to provide focused and customized solutions in institutional equities and investment banking areas. It offers companies, investors, and government entities a wide range of financial services in Private Equity, Equity Capital Markets, Merger, and acquisitions, Institutional equities. Additionally, it extends its services through subsidiaries and branch networks in Singapore, the United States, Canada, Bermuda, and  Europe. The vision is to emerge as the most trusted solution provider, expand their geographical reach, and be a leader of tomorrow’s India by revenue, market share, and profitability. The authorized and paid-up capital of the company stands at 17,500 lakhs and 7,350 lakhs, respectively.

2. Avendus Capital:

Avendus Capital is a leading financial service company that offers tailor-made solutions to asset management, wealth management, credit transactions, and investment banking—founded in 1999 with its headquarters in Mumbai. Avendus brings together ideas, innovation, and people to help high-performing entrepreneurs, wealth creators, leaders of the new-age economy to accomplish their dreams. The firm also provides strategic advice and Merger and acquisition advisory services to large global organizations. The wholly-owned subsidiaries of Avendus capital include Avendus Capital Incorporation and Avendus Capital Private Limited, located in New York and London, respectively.

3. Edelweiss Financial Services Limited (EFSL):

Edelweiss Financial Service Limited was a part of Edelweiss Group, founded by Rashesh Shah and Venkat Ramaswami in 1995. India’s leading financial service companies, Edelweiss, provide a spectrum of financial services to a substantial client base, including corporations, institutions, and individuals. They provide various assistance, including credit facilities, franchise and advisory business (Asset Management, Wealth Management, and Capital markets), and Insurance (General and Life Insurance). Credit facilities comprise both retail and corporate credit business, including SME and business loans, Agri and rural finance, wholesale mortgages, distressed credit. Centrum India and SMC Finance are the main competitors of Edelweiss.

4. JM Finacial Institution Securities:

JM Financial Institution Securities was established in 1998 with its headquarters in Mumbai. They provide all-in-one investment financial services comprising Investment banking, wealth management (fee and fund based activities), Asset management (mutual fund business), Mortgage lending (retail mortgage lending and wholesale mortgage lending), Distressed Credit (Asset reconstruction business). The company works with high net worth individuals, big corporations, and retail investors. They are notable for their private equity services in the business.

5. ICICI Securities Limited(I-Sec):

ICICI Securities Limited is a subsidiary of ICICI Bank Ltd. It began its operations in 1995 with its headquarters in Mumbai.  It is an integrated technology-based firm that conveys advisory services to corporations, financial institutions, and retail investors. Some of the company’s assistance comprises Investment banking, Institutional broking, Retail broking, Wealth management, placement of IPO. The company is the largest e-brokerage business in India. The company offers a spectrum of products and services in derivatives, equities, research, and advisory services, including equity portfolio advisory, financial planning, retirement planning, and estate planning.

6. IDBI Capital:

IDBI Capital was formerly known as IDBI Capital Market Services Limited. It is a wholly-owned subsidiary of IDBI Bank, incorporated in 1993. It is an investment banking company that offers a perfect bundle of services and products, including capital market products, Fund management, Private equity, Underwriting, and debt replacement. They aim to maintain integrity and transparency to guide their vision to have an International presence and work cohesively with passion and commitment towards the benefits of customers they serve.

7. O3 Capital Global Advisory Services:

03 Capital is a mid-market investment bank formed in 1993, specialized in providing strategic and financial advice to the retail, institutional and corporate clients. The company focuses on corporate finance and alternate asset management as its core business. They provide unbiased and tailored solutions to different industrialists, healthcare, life science, and financial services. Avendus Capital is the edge-to-edge competitor of O3 capital.

8. Veda Corporate Advisors:

Veda Corporate Advisors is the largest Chennai-based investment banking firm, founded in 2003. The firm assists clients in mergers and acquisitions, buyouts, venture capital, joint venture, private equity. Further, it serves real estate, health care, media, infrastructure, financial services. The company authorized and paid-up capital stands at 2,50,000 and 1,34,420, respectively.

9. Spark Capital:

Spark Capital-founded in 2001, with its headquarters located in Bangalore. It is one of the prime mid-market investment banks that connect with financial services encompassing Investment Banking, Fixed Income Advisory, Wealth Advisory, and Institutional Equities. Customer satisfaction is the core objective, thereby maintaining a sustainable and long-term relationship with clients. Sectors, where they built considerable transaction experience, are fintech, healthcare, commerce, infrastructure, and media. Spark Capital managed to be on the League table all time.

10. Unitus Capital:

Unitus Capital is the first established Impact-based Investment Banking Company in India. It was founded in 2008, having Bangalore as its Headquarters. It is engaged in services including Private Equity, Corporate Advisory, Debt finance, Structured product. Since its incorporation, it is committed to delivering top-rated capital raising and advisory services to local and international investors to benefit businesses and create a positive impact on society and the environment. Agriculture, education, healthcare, financial inclusion are the sectors where they serviced the most.

11. Mape Advisory Group:

Maps Advisory Group, formed in 2001, is a leading investment bank focused on Private Equity and Merger and Acquisition advisory starting from origination to closure. It has been consistently ranked top 10 investment in India. A team of senior investment bankers founds them to help their clients identify and implement effective transaction strategies. Nevertheless, they work with India’s most prominent industries across Telecom, Technology, Healthcare, financial services, Engineering.

12. Ambit Corporate Finance:

Ambit is one of the premier independent investment banks formed in 2006. It provides capital and financial advice to its clients, say, high net worth individuals, self-employed individuals, corporates, institutions, Small and Medium Enterprises. The firm concentrated on furnishing customized solutions that are appropriate to their client’s needs. It consists of 6 core business groups: Asset Management, Corporate Finance, Equity Capital Market, Institutional Equities and Research, Global Private Clients, and Non-Banking Finance Company.

Investment banks are genuinely the most demanded sector these days because they focus on managing and increasing clients’ financial needs, thereby helping them grow their business. A good investment banker knows the best ways to raise funds by adding more creative ideas to economic models. If you are looking for the best investors for funding your startups -Let’s get connected because” we make startup funding possible”.

startup-funding

Get started

Lack of finance is the main limitation in the infrastructural sector in India. The Government recognizes that infrastructure requires a significant investment that the public cannot finance alone. Also, it cannot be financially viable because of long capital investment requirements, long gestation period, and small revenue flows in the future. For this purpose, the Government decided to implement a new scheme named-“Viability Gap Funding” (VGF), formed in 2004, administered by the Ministry of Finance (Nirmala Seetharaman). It aims to complete the infrastructure projects successfully that are economically justified but fall short of financial unviable. A Plan Scheme had designed for this fund, and the budget amount is made on a year-to-year basis.

Earlier, the scheme was limited to economic infrastructure projects only. Later, In 2006, The Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi has approved for revamping or updating the VGF scheme as “the Scheme for Financial Support to Public-Private Participation (PPP),” extended over five years (till Financial Year 2024-2025). PPP refers to a project based on a contract between Government and a Statutory entity or private sector company for supporting infrastructure services. The new scheme encouraged both social and economic infrastructure projects. It aims to support projects that come under PPP and facilitate private sector investment in social infrastructure.

Further, the revamped scheme becomes operative within one month of Cabinet Approval,  financed from budgetary support of the Ministry of Finance. A total outlay of 8,100 crores for investment was predicted, out of which 6,000 crores was set apart for PPP projects in the economic infrastructure division and the remaining 2,100 crores for social infrastructure projects. In short, the VGF scheme is a one-time or deferred grant to support infrastructure projects that comes under Public-Private Partnerships (PPP).

List of sectors under VGF Scheme:

  • Health and education development.
  • Roads, railways, seaports, airports, bridges etc
  • Oil and gas pipelines
  • Electricity
  • Irrigation
  • Soil testing laboratories
  • Terminal markets
  • Water supply, sewerage, and solid waste management
  • Telecommunication (Fixed Network)
  • Telecommunication towers
  • Infrastructure projects in Special Economic Zones(SEZ).
  • Capital investment in the creation of modern storage capacity(including cold chains and post-harvest storage)
  • Common infrastructure in agriculture markets

 Objectives:

  • To attract and promote more PPP’s in social and economic infrastructure, thereby making essential projects viable.
  • To facilitate investment in social sectors such as education, health, water supply, wastewater, solid waste management.
  • Building new hospitals and schools generate more job opportunities, especially in remote areas.
  • The new scheme will be beneficial to the public as it helps develop the country’s infrastructure.
  • It focuses on integrating private participation of social sectors.

Applicability and Eligibility:

  • Within 30 days of receipt of the project proposal, Empowered Committee shall inform the Government/Statutory Entity about the eligibility of projects for VGF.
  • It can be only applicable to PPP projects proposed by Central Government/Central ministries/Statutory Entities as the case may be.
  • The project shall be implemented (developed, financed, constructed, maintained for the project term) by a Private Sector Company for funding.
  • The project should provide service against payment of a pre-determined tariff or user charges.
  • A private sector company shall be eligible only if selected through open and transparent competitive bidding.
  • The proposal will be applicable only if the contract/concession is awarded in favor of a private sector company.

Funding:

  • Funds shall be invited by concerned State government/Central Ministries/Statutory Entities in the form of the capital grant within four months of the approval of the Empowered Committee. The period may be extended by the Department of Economic Affairs, if necessary.
  • State Government/statutory entity/Ministry will restrict funding to 20% of the Total Project Cost if the sponsoring State Government/Statutory Entity/Ministry aims to provide assistance over and above the stipulated amount under VGF.

Disbursement of Grants:

  • The VGF grant will be disbursed at the construction stage only if the private sector company has subscribed and expended the equity contribution required for the project.
  • After the recommendation of the sponsoring authority, the Empowered Authority can release the grant to an escrow account.
  • The Empowered Committee, lead financial institution, and Private Sector Company shall enter into a tripartite agreement as prescribed by Empowered Committee from time to time.

Monitoring:

A lead financial institution (refers to the financial institution funding the PPP projects)  shall send regular monitoring and evaluation of projects for the disbursal of VGF and quarterly progress reports to the Empowered Committee.

The revamped VGF has two components:

1. Sub scheme 1:

  • 30% of the Total Project Cost (TPC) of the project is treated as VGF by the Central Government. Statutory entity/Central Ministry/State Government also provides additional support for funding (up to 30% of TPC).
  • Eligibility:

It mainly focuses on catering social sector projects such as Health, education, water supply, wastewater treatment, solid waste management.  These projects may face poor revenue streams and bankability issues to serve fully capital costs, and also projects should have at least 100% operational cost recovery.

 2. Sub scheme 2:

  • This scheme supports demonstration/pilot social sector projects. Central and State Government provides up to 80% of capital expenditure and 50% of Operation and Maintenance(O&M) for VGF over the first five years.
  • Eligibility:

The projects should come from the Health and Education sectors with a minimum of 50% Operational cost recovery.

64 projects have been accorded ‘final approval’ with a Total Project Cost of INR 34,288 crore and VGF of INR 5,639 crore since the inception of the scheme. VGF of INR 4,375 has been disbursed till the end of the financial year 2019-2020.

VGF Scheme is used to finance infrastructure projects. Not only infrastructure projects but almost all sectors of our economy also require funds to operate successfully. That’s why they seek the help of investment banks to raise funds effectively before launching their business. Are you considering a new business? Do you need funding? Drop a mail or fill-up the form below to get assistance right from the start.

startup-funding

Get started

An investor is a person or an entity that generates capital that many startups need. Investors are always looking for a return on their investment in the future. For this purpose, they seek to know more than just a great business idea or solid business plan. That is, they need to see whether you have proof of concept behind your thoughts. Further, they may be looking for a startup having a competitive advantage and significant market size. Since there is no guarantee that one can make money from investment, most investors research investment opportunities based on risk tolerance. Investors assist in the business plan, advise to manage funds precisely, and attempt to create goodwill for the startup, further attracting more investors to invest, thereby improving cash flows. Thus, it is essential to maintain a sustainable and robust relationship with investors because the success and growth of startups largely depend on them. As we all know that investors expect a financial reward in return, the type of investment preferred will decide which category an individual falls. Based on tactics and attitude towards investing, there are mainly three types of investors, which include;

1. Pre-Investors:

Pre-Investors are those individuals who haven’t started investing. He may lack financial consciousness or awareness, which could change the direction of their lives. They are very little concerned about investing. Likewise, there’s little savings or investment to exhibit. Consumption needs rules pre-investors financial world which prioritize over savings and investment. These investors spend most of their entire income to cover monthly expenses with no money left for savings. However, it is possible to transform this mindset of pre-investor (unable to make income) entirely during this stage.

Additionally, some individuals may start to think about investing. Still, they haven’t moved to put capital into resources or have a company retirement plan, but the personnel department need not arrange it for them. When pre-investor procure more income, they start to spend more since lifestyle is more prior than monetary security. A pre-investor should set time to learn a thorough knowledge base about personal finance, current market situation, competition, to improve their stand and take action as an investor.

2. Passive Investors:

Passive Investors are those investors who are ready to leap into investing with low maintenance costs. It is the most common starting point for financial security, mainly supported by financial institutions, educational services, and websites. They often invest over a long time, adopting a buy and hold strategy, and generally depend on expertise like brokers, money managers, financial planners for their investment strategy since they lack the required knowledge and skill. In passive investing, investors buy and hold security (mutual fund, stock, real estate) at retail price for a more extended period with minimal trading in the market. Unlike active investors, since they ignore market fluctuations/setbacks, they may not expect profit from short-term gains. Index investing (Index ETF and index managed fund) is a typical example of passive investing. The positive side of passive investors includes- complete transparency over their investments. They know precisely where their cash is and can eliminate and reinvest it wherever they seem to be fit. Furthermore, when concerned about its negative side, it requires regular savings contribution to achieve financial security and generate lower returns when compared to other investors.

3. Active-Investors:

An active investor is an investor who takes more hand-on-approach intending to earn higher returns. He may dedicate his time and effort to save money, thereby making their money hard for them. The reason is that they need to focus on building active strategies that add value in return on capital, which is not an easier task. The main difference between passive and active investors is that passive investors aim to get market returns, whereas active investors aim to beat the market index. One significant advantage of active investors is that they receive two sources of return on investment:- market-based return and value-added return. If they can accurately assess the market and gain from price fluctuations, they can profit and quickly make trades from active investing. Also, they continuously monitor market conditions to identify short-term trading opportunities. They used to engage active fund managers to oversee investment on their behalf. This type of investor requires deep knowledge about wealth management to earn a return on their capital and a high confidence level to make investment decisions properly. The downside includes incurring higher transaction costs and higher risk to generate higher returns when compared to passive investing. Active investment can be a good choice for investors who have substantial time and energy to learn the pros and cons of marketing strategies.

WHAT TYPE OF INVESTOR DO YOU WANT TO BE?

Every investor is unique, having a different investment style. The right choice depends on the investor’s personal preferences, risk tolerance, and financial goals. So, there is no single answer to which will be suitable for everyone. The first step towards the investment journey is a clear strategy in place. For example, if you are interested in the stock market and have enough time and desire to put your efforts into accessing your funds, you may consider active investing. If you have enough years before retirement and working hard to increase your income without any interest in learning the ins and outs of the market, passive investing might be worth exploring. Pre-investor is the appropriate starting point for all individuals. They should take considerable time to learn about market conditions, personal finance options and step out from this stage to develop a vivid financial future.

Any individual can become an investor with just a little money at hand. Many people pass through these stages of investors as their knowledge, experience, skills develop. These three types of investors determine financial security and ways to advance your investment strategy to the next level. If you are confused about the right investment option – Sign up for a consultation with us. We are here to support you!

startup-funding

Get started

Many startups lose new opportunities due to a lack of funding. So, they turn to banks and other financial institutions for fulfilling their financial needs. Collateral free loans (also known as Unsecured loans) are funding where loans are given without submitting any security/guarantee with the banks. These loans are given to applicants based on their income, creditworthiness, and business performance. The interest rate of such loans will be higher when compared to secured loans. Address proof, ID proof, age proof, passport size photo, signature, IT returns, income statement, bank statement, financial statements audited by CA are some of the documents required for getting unsecured startup loans.

Qualification for collateral-free loans:

  • The applicant should be age between 21 to 65 years.
  • Applicant should have a CIBIL score of 750 or more.
  • The business should be operational for at least two years.
  • The business’s annual income should be a minimum of INR 2 lakhs (turnover should not exceed INR 25 crore).
  • The applicant should be an Indian citizen with no criminal record or previous defaults from any financial institution.
  • The startup should have a feasible business plan, and innovative products should be provided.
  • The business should get approval from the Department of Industrial Policy and Promotion(DIPD).

Types of Collateral free loans for startups

1. Unsecured Term Loans:

Term loans are long-term loans availed for a specific time duration (generally 1-10 years) and are repaid in the form of EMIs. These loans are used for business expansion or growth, new product launch, purchase of machinery and equipment, construction of buildings, offices.

2. Unsecured Working capital loans:

As the term suggests, there is no need to pledge assets as security. Working capital loans are availed for a short period for meeting day today business expenses such as inventory financing, rent payment, salary to employees. The loan is repaid within one year of acquiring it.

3. Unsecured Line of Credit:

An unsecured line of credit is also known as a revolving line of credit. Banking and non-banking institutions offer only a predetermined amount of funds or funds up to a limit at higher interest rates (since lending funds without collateral security are riskier for the lender). However, as a startup, they may require quick and recurring funding, so business lines of credit can be the best startup loan without a collateral requirement. One major advantage is that startups don’t have to pay interest on the borrowed amount for the first 9-15 months. To get this loan approved, startups need to prove that they have good personal and business credit scores and revenue history.

4. Business Credit Cards:

Business credit cards are one of the cost-effective funding tools for startups. It provides short-term cash flow with credit limits. It helps earn rewards like cash back, preferred pricing, airline miles, and more like a personal credit card. Further, it helps to manage business finances through record-keeping. All you need is a good CIBIL score to access these cards. Some of the best available unsecured business credit cards include Capital One Spark Classic, Capital One Spark Miles, The Blue Business Plus, Chase Ink Business Cash.

5. Merchant cash advances:

Merchant cash advances are also known as Cash Advance Loans. It provides a lump sum of funds for your business growth in exchange for daily credit card/debit card sales. It is the most expensive unsecured startup loan in the market because it accepts businesses having poor or limited credit scores.

6. Equipment financing:

If you require expensive equipment for your startup, equipment financing will be a better option. Here the equipment bought at the time of starting the business acts as a security for the loan. Once the startup earns revenue, the customer can repay the amount either through lump sum or monthly instalments. In case of non-payment, lender can seize the equipment to recover his losses. Thus, Equipment financing helps you to set up and finance machinery/equipment purchases.

Unsecured loans under Government Schemes

1. Credit Guarantee Scheme:

Credit Guarantee Fund Trust For Micro and Small Enterprises headed this scheme. The government initiated this scheme to facilitate the flow of credit to MSEs engaged in manufacturing or service activities. Startup enterprises are majorly benefitted under this scheme. It allows startups to take loans at a reasonable rate of interest. The maximum limit of a loan is one crore, and the loan amount depends on the eligibility and viability of the business. The lending institutions include Commercial banks, Private and Public banks, Foreign banks, Regional Rural Banks, SBI, and its associated banks under NABARD.

2. Pradhan Mantri Mudra Yojana(PMMY):

This scheme was launched in 2015, and it is headed by MUDRA that stands for Micro Units Development and Refinance Agency. It grants funds to micro units and non-cooperative small business sectors. The interest rate varies from bank to bank, and there are no minimum loan amount criteria. This scheme is again classified into three categories:

  • Shishu scheme: This scheme is primarily for startups providing loans up to 50,000.
  • Kishor scheme: The loan offered ranges from 50,000 to 5 lakhs.
  • Tarun scheme: The loan offered ranges from 5 lakhs to 10 lakhs.

Both Kishor and Tarun schemes are designed for different business stages and funding needs.

3. Standup India Scheme:

This scheme provides grants to women entrepreneurs and people under the category of SC/ST. The loan amount ranges from 10 lakh to 1 crore and should be repaid within seven years.

4. Bank Credit Facilitation Scheme:

This scheme was headed by the National Small Industries Corporation(NSLC) to provide credit requirements of MSMEs units. The loan repayment tenure depends on the startup’s income, ranging from 5-7 years, and in some cases, it can be extended up to 11 years.

5. Coir Udyami Yojna:

This scheme is initiated by the Coir Board that aims to support coir units. It provides loans to project-based businesses with a flexible interest rate having a maximum period of 7 years. However, startups that have already assisted Government subsidy under any Indian or State Government scheme cannot benefit from this scheme.

Startups have a tougher time in obtaining funding. They seek unsecured loans from banks, financial institutions, and  Government as funding sources because they may have no or little assets to be pledged at the beginning stage. Are you a startup? Let us know about your funding sources. If you haven’t already, get started with Scaalex to take advantage of getting the best investors for funding.

startup-funding

Get started

An investor is a person who contributes money to a business with the expectation of receiving a financial return in the future. The main aim of any investor is to earn maximum profit with minimum risk. Most startups depend on investors for funding their startups. Whether the business is introducing a new product or expanding its operations, the investor’s fund will contribute enormous support for the company. Investors help businesses get funded and ensure that the capital invested is correct, oriented towards either value or growth strategies. All investors are not the same; they may vary according to resources, capital styles, risk tolerance, motivation. The investor’s quality and level of involvement determine the success or failure of a startup. So, it is necessary to understand different types of investors and learn how to choose the right one. Let us look at the quick view of types of investors:-

1. Personal investors:

The first type of investor entrepreneurs should be approaching personal investors, including family, friends, close acquaintances. This type of investor is more suitable to get the company off the ground. They may not provide much money simultaneously; there is a limit to how much they can invest in your startup. The best thing is that they know and trust you the most. But there is a need for heavy documentation for helping you out, which outlines the rate of return, size of the investment, ownership arrangements. Therefore, Ensure to consult a lawyer to avoid obstacles if any.

2. Peer-to-peer lenders:

Peer-to-peer lenders are individuals or groups of individuals who provide capital to small businesses/startups. Arranged through websites where owners have to apply with peer-to-peer lending companies like Prosper and Lending club for getting their desired money. Startups need to develop a business plan and share their financial forecasting, market research, industry analysis. In some instances, you will ask to share how much you have invested so far. The potential peer-to-peer investors will access the creditworthiness of the company. Once approved, both owner and lender (private individual) negotiate an interest rate for the investment, and then the lender supplies the funds to the owner.

3. Angel investors:

Angel investors (also called seed investors, private investors, business angels, angel founders) are ex-founders who invest their own money in startups or new entrepreneurs. They are the primary source of funding and the most active type of investor that many people may have heard about before. They may be wealthy entrepreneurs, business professionals, and corporate leaders. The best part of angel investors is that invested funds don’t have to repay in business failure. But at the same time, investment is generally risky and does not represent more than 10% of an angel investor’s portfolio, say 1 out of 10 deals. An angel investor supplies funds with the expectation of getting a higher rate of return (that is, equity position and handle the company’s management decisions). They are always high net-worth individuals focused on helping startups to grow in the initial stages and foster innovation, thereby gaining credibility and acceptance in their industry. They also used to advise the business that they are investing in. They can be approached directly online, through an introduction from other startup founders, or at live pitch events. Before attracting angel investors, startups ensure that their business is assembled and plan to push ahead.

4. Venture capitalist:

A Venture capitalist (VC) is a person or firm that provides funds to startups with long-term growth potential.  Generally, venture capitalists are large venture capital firms such as well-off investors, investment banks. They focus on companies with a solid business plan and high-profit returns (growing companies); thus, they expect partial ownership of a company and overall management decisions. VCs have relevant experience and connections with other investors, industry leaders. Startups may tend to choose venture capitalists as they get both open funding and advice from experts. They are not interested in risky startup companies that require a small number of funds to get started. They invest in a high volume of deals, say 1 out of every 100 deals, compared to angels who invest in 1 out of 10 sales. They conduct considerable due diligence, a process that requires up to 5 months for each investment. VCs might be your best funding option if you need a good cash infusion to get started.

5. Incubators and Accelarators:

Incubators are collaborative program designed to help startups for bring out innovative ideas with access to funding opportunities, training, guidance, mentorship, and networks. Whereas, Accelerators are program that help startups for rapid growth with financial support, training, mentorship, and networks.

6. Banks:

Startups seek the help of banks to cover their small business loans. For early startups and businesses, it is very challenging to qualify for a bank loan. Typically, banks ask for an overall business plan that includes a detailed description of the company’s product/service, financial and management projections, plans for goal implementation, and then decides whether it is interested in providing funding in the form of a loan. You need to show that you’re financially stable. In addition to banks and other financial institutions, you need to research the loans guaranteed by Small Business Administration (SBA). SBA loan programs include;

  • 7(a) loan: 7(a) loans meant for purchasing equipment, inventory, working capital, real estate purchasing.
  • Microloans: Microloans consist of a loan amount with a maximum of $50,000 for purchasing equipment, inventory, working capital. The real estate already purchased or debts already arise does not come under this category.
  • 504 loans: 504 loans are needed to expand the operations of startups say acquisition of fixed assets like land and building, real estate,  modernization of existing facilities, debt refinancing.

Hopefully, now you will be aware of the types of investors for funding startups. Every startup/company is unique. That is why choosing the right kind of investors is very vital for your startup. Select the best by assessing where your business stands and what is suitable for you and your startup. It is the area where most startups fall short. Worried? Don’t be! Get started with our expert’s help. We ensure your new business gets off the ground properly.

startup-funding

Get started

Here is a look at the ways that private venture capitalists fund small businesses. Many private investors are willing to fund your business startup up to a certain point, however they will not provide ongoing funding unless there are certain criteria or performance indicators that have been met. This article will provide details on how you can present your business plan and case for VC funding.

As a small business owner, it is important that you work with a seasoned entrepreneur who has the experience needed to evaluate and assess your business. Presenting your business plan in front of an experienced financing entity can be extremely intimidating. However, this should not discourage you. There are several sources online where you can get financial backing from a variety of angel investors. You will also want to compile a list of prospective venture capital investors that you have spoken to, so you have some possible options should you need to raise additional funds.

While working with a venture capitalist can be helpful, you must remember that this is funding for your business. Do not expect to receive free money from a venture capital firm. You must have a highly compelling business plan that presents a solid case for obtaining VC funding. To attract and to win a substantial amount of VC funding, you must show that your business has the ability to generate a significant income. Additionally, as a small business you may need to meet certain criteria before you are considered for venture capital funding.

Once you have raised enough money from a venture capital firm, you will need to raise additional funds in order to sustain operations and grow your business. You can do this by selling some of your assets, such as office furniture, advertising, and certain types of equipment. Depending upon your own personal circumstances, you may need to increase your personal credit limits to obtain a larger amount of financing for your business. You will also want to consider increasing your employee numbers. Having more employees can provide you with an opportunity to obtain a loan early on if you start your business with only a few employees. Your personal credit can also be improved by making your business more profitable.

If you are looking for a small business loan, your options will be much different than a large corporation. Because of small business regulations, most banks do not make loans to small businesses. Therefore, your best bet for obtaining financing will come through a private investor or other third party. In some circumstances, you can secure a small business loan from a bank if you can convince a bank that your business has a higher chance of being successful than a traditional small business. In addition, if your credit has been impressive to a bank or other institution, you may be able to get a line of credit that is based solely on your personal credit.

In some situations, you can obtain financing from the SBA even if your business is not considered a small business. For instance, if you are starting a gardening business you may have the option of applying for small business loans from the SBA even if it does not qualify as a small business. On the other hand, if you are starting an online business, you will almost definitely not qualify for small business loans from the SBA. This is due to the fact that there are a number of differences between an online business and a traditional business.

As previously mentioned, you can obtain small business loans from the SBA even if your business does not meet the definition of a small business. The way this works is that you will need to provide the lender with a business plan so that they can determine if you will be a good investment. Although this process can take some time, it will be worth it in the long run. In addition to providing the lender with a solid business plan, you will also want to prepare a financial proposal as well. This is a document that will show how you will use the funds that you receive for your business. You should definitely include a financial forecast because this will allow you to project the income that you will be able to generate in a year.

When you apply for financing from the SBA, you can expect to get an approval very quickly. You will probably receive a decision within one day and this will allow you to get back to focusing on getting your business up and running. However, even after you get approval, you may find that you are still not able to get enough money from your potential VCs. If this is the case, you should consider talking to several different venture capitalists to see what kind of financing they might be willing to provide.