STARTUP DIARIES: INITIAL FUNDING

Braingroom
18 Jun 2018

“There was an idea, to bring together a group of people”- thus began the trailer of the much-awaited movie Avengers: Infinity War. Everybody has ideas. But, only a select few put their ideas to action and an even smaller percentage do it efficiently. Every year, nearly 300 million aspirants decide to become their own boss and start a company of their own. However, a mere 50 thousand of those see the light of day and get funded. It is a demanding undertaking, to set shop and begin your own business. There are a lot of variables and uncertainties involved. It takes a great deal of courage to venture on your own. But ideas are meant to be acted upon. If you feel that you have a paradigm shifting idea, it is imperative that you must work upon it. Imagine if the Avengers had never banded together. There would have been no defenders and Earth would have been left vulnerable. Although it is a fictional one, the analogy applies here too.
 
The first hurdle every start-up faces is getting the initial funding. It is not enough that you have an exciting and promising idea. You need statistics to back up your idea and show that you have what it takes to be successful. However, not every first-time entrepreneur manages to successfully get funded. Venture capitalists and angel investors are rather cautious about investing in entrepreneurs who do not have a history of success. Thus, it results in a paradox, where entrepreneurs need funding to prove themselves and investors need entrepreneurs to have a history of success before investing in them. Hence, it is high time that entrepreneurs begin exploring other methods of funding their start-up.
 
In today’s world, there are a number of ways to fund your start-up without solely relying on investors. The most obvious and recommended one is Bootstrapping- getting funds from your own savings or borrowing from kith and kin. There are a lot of advantages to this. When you use your own money, you’re thoroughly invested in your business. This plays a psychological role in increasing your work efficiency. Moreover, it also protects you in a positive light to potential investors. They feel hopeful about your business if they know that you were confident enough to invest your own money in it. It also shows you’re driven and motivated. However, this requires you to have a significant amount of savings already or your family to be loaded, to be effective. So this might not be feasible for a majority of entrepreneurs. If you’re still in school and already have plans to become an entrepreneur, the best possible course of action to take would be to participate in as many contests as possible. This has multiple benefits. You get to work on your start-up idea and develop a working business plan before actually entering the corporate world. This gives a lot of time to research and allows you to spot challenges and hone your business plan. Additionally, it also gives your future company publicity and recognition in the business world. This will be highly conducive in attracting future investors and has proven to be helpful for a number of start-ups.
 
If you’re based in a metro city or a major business hub, you’ll be able to avail the services of start-up incubators and accelerators. In exchange for stock options, they provide you with all the resources you require with additional access to mentors and leaders. These connections will prove to be highly beneficial in the long run. A rather contemporary method of raising funds is crowdfunding, where you share the details of your business on a crowdfunding platform and interested customers invest in you with a promise of pre-buying your product or donating for your cause. Besides raising funds, it also helps in marketing your product.
 
Additionally, there are also other ways such as taking a loan from banks or private lenders and utilizing government programmes. With a plethora of conventional and unconventional means to raise funds, it is futile to worry about finance and fail to focus on upgrading your business model and acquiring permanent customers.

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Braingroom


18 Jun 2018


“There was an idea, to bring together a group of people”- thus began the trailer of the much-awaited movie Avengers: Infinity War. Everybody has ideas. But, only a select few put their ideas to action and an even smaller percentage do it efficiently. Every year, nearly 300 million aspirants decide to become their own boss and start a company of their own. However, a mere 50 thousand of those see the light of day and get funded. It is a demanding undertaking, to set shop and begin your own business. There are a lot of variables and uncertainties involved. It takes a great deal of courage to venture on your own. But ideas are meant to be acted upon. If you feel that you have a paradigm shifting idea, it is imperative that you must work upon it. Imagine if the Avengers had never banded together. There would have been no defenders and Earth would have been left vulnerable. Although it is a fictional one, the analogy applies here too.
 
The first hurdle every start-up faces is getting the initial funding. It is not enough that you have an exciting and promising idea. You need statistics to back up your idea and show that you have what it takes to be successful. However, not every first-time entrepreneur manages to successfully get funded. Venture capitalists and angel investors are rather cautious about investing in entrepreneurs who do not have a history of success. Thus, it results in a paradox, where entrepreneurs need funding to prove themselves and investors need entrepreneurs to have a history of success before investing in them. Hence, it is high time that entrepreneurs begin exploring other methods of funding their start-up.
 
In today’s world, there are a number of ways to fund your start-up without solely relying on investors. The most obvious and recommended one is Bootstrapping- getting funds from your own savings or borrowing from kith and kin. There are a lot of advantages to this. When you use your own money, you’re thoroughly invested in your business. This plays a psychological role in increasing your work efficiency. Moreover, it also protects you in a positive light to potential investors. They feel hopeful about your business if they know that you were confident enough to invest your own money in it. It also shows you’re driven and motivated. However, this requires you to have a significant amount of savings already or your family to be loaded, to be effective. So this might not be feasible for a majority of entrepreneurs. If you’re still in school and already have plans to become an entrepreneur, the best possible course of action to take would be to participate in as many contests as possible. This has multiple benefits. You get to work on your start-up idea and develop a working business plan before actually entering the corporate world. This gives a lot of time to research and allows you to spot challenges and hone your business plan. Additionally, it also gives your future company publicity and recognition in the business world. This will be highly conducive in attracting future investors and has proven to be helpful for a number of start-ups.
 
If you’re based in a metro city or a major business hub, you’ll be able to avail the services of start-up incubators and accelerators. In exchange for stock options, they provide you with all the resources you require with additional access to mentors and leaders. These connections will prove to be highly beneficial in the long run. A rather contemporary method of raising funds is crowdfunding, where you share the details of your business on a crowdfunding platform and interested customers invest in you with a promise of pre-buying your product or donating for your cause. Besides raising funds, it also helps in marketing your product.
 
Additionally, there are also other ways such as taking a loan from banks or private lenders and utilizing government programmes. With a plethora of conventional and unconventional means to raise funds, it is futile to worry about finance and fail to focus on upgrading your business model and acquiring permanent customers.

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