How to Raise Funds For Startup Business in India
Learning how to get funding for startup business involves carefully mapping out your funding needs and researching which funding option is best for you. You will also need to gather all the essential business and legal documents to show investors and financial institutions that you are a trustworthy investment.
There are a ton of funding options available to startup businesses in India, including business loans, venture capital funding, or even asking your family and friends.
Here is a list of all the different sources of funding for start-ups in 2022.
How Startup Funding Works
Starting funding comes in many different forms, from traditional financing routes, such as business loans, to non-traditional routes, such as online lenders and investor funding.
Your startup ownership may be affected by the type of funding. Investor funding might involve sharing control over your company, whereas a small-business loan will allow you to maintain complete ownership over your startup.
It is important that you choose the option that suits your needs the best.
Securing funding for a startup can be done by following these five simple steps:
1. Calculate how much funding you need.
2. Create a comprehensive business plan outlining your business model, funding needs, and profit plans.
3. Gather all the essential documents, such as bank statements, profit and loss statements, commercial leases, etc.
4. Research and decide the type of funding that is best for your startup.
5. Create a repayment plan to repay all the money you borrow.
10 Ways to Fund Your Startup in 2025
As a startup owner, it is crucial to be aware of all the funding options available to you in order to decide what’s best for your business. Here are the 10 best ways to fund your startup in 2025:
1. Bootstrapping:
Also known as ‘self-funding’, this is the most common and recommended method for initial start-up capital. By bootstrapping your business, you will have full control over its operations and profit. This will also confirm the stability of your business when you decide to raise external funds in the future.
2. Family and friends:
Your family and close friends have the maximum trust in you and your idea. Therefore, asking them to invest in your business can be a smart move as you retain 100% of the control. Although this is a less formal method of raising funds, you can draw an agreement to protect the interest of both parties.
3. Angel investment:
Angel investment or seed funding is ideal for early-stage start-ups. Angel investors are individuals with surplus cash who are willing to take a high risk for high profits. Angel investors usually offer a small ticket size of funding in exchange for equity, which means you will not have a 100% control over your start-up.
4. Venture Capital funding:
We recommend you opt for venture capital funding at a later stage when you generate good revenue. Venture capitalists will only invest in your start-up if they find your business model promising. They will also evaluate different aspects of your business and expect a high return on their investment.
5. Business loan:
Another convenient way of raising funds for your start-up is getting a loan from a financial institution. Based on your requirement, you can either get a working capital loan or a term loan. But looking at the high risk associated with start-ups, most lenders follow strict guidelines to approve loan requests.
6. Government loan scheme:
The Government of India has introduced several schemes to promote entrepreneurship and help start-ups and MSMEs with their credit requirements. You can avail these schemes for collateral-free and affordable business loan interest rates. The Government business loan schemes include:
- Start-up India
- MUDRA loan scheme
- Stand-up India
- Credit Guarantee Fund Trust
- Trade-related Entrepreneurship Assistance and Development (TREAD)
- Make in India
- Atal Innovation Mission, etc.
7. Crowdfunding:
Crowdfunding helps you raise funds by collecting small investments from a large number of people, typically through online platforms. By presenting your startup idea on platforms like Ketto, you can attract backers who believe in your vision. This method helps you secure the necessary capital and validates your business concept through public interest and support.
To successfully launch a crowdfunding campaign, start by crafting a compelling story that clearly communicates your mission and the problem your startup solves. Use engaging visuals and offer attractive rewards or incentives to entice potential backers.
8. Freelancing:
Freelancing can be an excellent way for you to generate funds while building your startup. You can leverage your skills to take on freelance projects for a steady income stream. Platforms such as Upwork, Freelancer, and Fiverr make it easy to connect with clients both locally and internationally.
Freelancing also offers valuable experience and networking opportunities. Working on diverse projects helps you develop a versatile skill set and gain insights into different industries, which can be beneficial for your startup.
9. Grants & Competitions:
Grants and competitions are fantastic opportunities for you to secure non-repayable funds and gain recognition for your startup. Various government bodies, private organisations, and industry-specific groups in India offer grants to support innovative ideas and entrepreneurial ventures. Participating in startup competitions can win you financial rewards and also help you gain valuable exposure and mentorship.
Research available opportunities and select avenues that match your startup’s industry and goals. Work on creating a strong application that highlights your business model, USPs and potential impact.
10. Small Business Grants:
Small business grants are an excellent funding source for you, as they provide capital without the need for repayment. In India, various government schemes and private organisations offer grants to support startups and small businesses. These grants are often targeted towards specific sectors, such as technology, manufacturing, or social enterprises, and can help you cover initial expenses, research and development, or expansion costs.
To apply for such grants you need a persuasive proposal that clearly defines how such a grant will help you achieve your business goals and the impact it will have on it.
What to Consider before Raising Capital for your Startup
Here are a few key things to keep in mind before embarking on your fundraising journey:
1. Have a clear vision of your startup’s unique points, primary audience, and business scalability from the very start.
2. Build relationships and grow your network, as they are key to finding new investors, business partners, and potential clients.
3. Stay professional and avoid burning any bridges as it may lead to loss of investors and funding opportunities.
4. Maintain patience and be ready to talk to plenty of investors.
5. Remember that rejections are a normal part of the fundraising process.
6. Manage your startup’s finances carefully to avoid any financial mishaps.
Grow your Start-up with Tata Capital
Are you ready to take a plunge into the start-up ecosystem? Are you ready to become the next Indian unicorn? If yes, then Tata Capital is your trusted partner. With affordable interest rates and an easy loan approval process, getting funds for your business is easier than ever.
Visit our website to check your business loan eligibility today. You can also use our business loan EMI calculator to check your potential EMIs.
Conclusion
Raising funds for a startup in India can be overwhelming. However, with careful planning and reviewing of the available options, you can make the right funding decision for your startup and ensure business success. Bootstrapping, support from family and friends, angel investment, venture capital, business loans, and are some of the best ways to secure funding for your startup. Make sure to have a clear vision of your startup goals, target markets, and funding needs as you venture into the fundraising ecosystem. A thoughtful and well-prepared approach increases the chances of securing the right funding to grow your startup into a successful business.
FAQs
You are eligible for the Startup India scheme if you are an Indian citizen, operating a business registered in India, and meet the criteria of being a startup as defined by SEBI. Your business should be less than seven years old and have an annual turnover not exceeding ₹100 crore.
There is no specific age limit for a startup under the Startup India scheme. The primary criteria focus on the business’s age, which should be less than seven years from the date of incorporation.
The best type of startup aligns with your passion and market demand. Technology-driven startups, especially in areas like fintech, edtech, and healthtech, are highly promising in India due to the growing digital landscape and consumer needs.
The purpose of funding is to provide the necessary financial resources to an early-stage startup in order to help them launch, operate and grow. The capital provided by funding helps the startup in product development, manufacturing, office space, etc.
You can approach different kinds of investors depending on your business model and needs, such as friends and family, angel investors, venture capital funding, crowdfunding, etc. Make sure to create a comprehensive business plan and have all the necessary documents at hand to show potential investors.
22 April 2025
7 mins read
Previous Post
Equity funding is the best options for many startups as it offers rapid growth and capital from investors in exchange for ownership. Other funding options include bootstrapping, angel investment, and venture capital funding.