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Started a new business? Want to raise capital? Top 5 ways to finance your startup
Money is the bloodline of any business.
A recent study found that over 94% of new businesses fail within the first year. Lack of funds turned out to be one of the common reasons. Money is the bloodline of any business. The long, arduous but exciting journey from an idea to a revenue-generating business requires the fuel of capital. That's why, at almost every stage of business, entrepreneurs ask the question, "How do I finance a startup?" If you are wondering how to raise money for your business, Abhinav Sherwal, Co-Founder, Recur Club, suggests top 5 ways and businesses fundraising channels you can use.
Suggesting Subscription-Based Financing, Abhinav Sherwal said, "There is a silent revolution taking place leading to innovative, fast, and reliable options for financing. Financing alternatives have emerged for SaaS businesses, outdoor conventional fairness, and undertaking debt. Subscription-based financing helps recurring revenue companies raise funds in a non-dilutive manner by trading their future revenues from subscriptions for upfront capital. This relative stability and maturity of the recurring revenues make it akin to a fixed income like yielding asset profile for an investor. It is especially suited for SaaS businesses and other subscription-based companies that need funds for growth and customer acquisition. This is the most valuable asset that one can use to elevate capital and also, it will increase the lifetime value of the client. it is a great way to control the fund`s flow. This reduces the frequency of capital calls, thereby trimming the executive burden. One of the Subscription-Based Financer, Recur club is providing finance to the organizations to accelerate immediate capital growth without diluting capital or incurring debt. They unlock the trading limit within 48 hours by connecting the financial and billing data and allow companies to convert monthly paying customers into annual paying customers. Organizations with a steady income can trade contracts on the Recur platform and receive initial capital. Recur aims to democratize fundraising, and as a promise to that idea."
On Listing your Stock/Going Public, Sherwal adds, "Selling stock on the stock exchange helps raise capital and is also a sign of reputation. You cannot start selling shares on the two major stock exchanges in India, BSE or NSE, and ask them to go public. First, it is a necessary legal process for an initial public offering (IPO). Then you need to navigate the exchange process before finally starting to trade. Initial listing enhances the company's ability to raise additional funds through various means such as priority issuance, capital increase, placement of qualified institutions, and ADR/GDR/FCCB, and through this process, it can attract various institutions and professional investors. The company strengthens its structure and reputation by attracting capital. It provides liquidity to investors and effective monitoring of issuer compliance and securities transactions for the benefit of investors."
Talking about Angel Investing, he said, "Angel investing is a type of private investment where wealthy investors try to get a higher return by taking more risk than investing in the open market. Angel investors may be well-versed entrepreneurs and may have knowledge or experience in the industry they invest in. In addition to investing in capital, they can provide guidance, networking, and knowledge to startups. There are several platforms offering finance such as Indian Angel Network, velocity, Angel, etc but IAN is different amongst them all. They offer high-quality monitoring, vast networks, and game-changers for strategy and execution. Their experience and knowledge help to evaluate potential and risks at an early stage. In addition to funding, the network provides access to mentoring, an in-house angel network, and counseling."
On Working Capital Loan method, he adds, "A working capital loan is a loan you receive to fund the day-to-day operations of your company. These loans are not used to buy long-term assets or investments, but to provide working capital to meet the company's short-term operating needs. These needs may include costs such as wages, rent, and debt payments. Therefore, a working capital loan is just a business loan that a company uses to finance its day-to-day operations. Another notable advantage is that it is a form of debt financing and does not require a capital transaction. This means that even if funding is urgently needed, the business owner has full control over the company. Some working capital loans are unsecured. In this case, the company does not need to post collateral to secure the loan. One of the top picks would be SBI Business Loans. They are a business opportunity for MSMEs. The main purpose of SBI Simplified Small Business Loans is to help small businesses build working capital and fixed assets. To avail of this loan, you should have 5 years of business existence with a Current account at any bank for the last 2 years and a minimum average monthly balance of Rs 1 Lakh."
Suggesting Business Accelerators method, he explained, "Startup Accelerator is an organization that provides mentoring, capital, and relationships with investors and business partners. Designed to grow quickly for select startups with up-and-coming MVPs and founders. Global Accelerator is energizing entrepreneurs and startups with a support ecosystem and abundant new funding. The program offers mentoring and capital in exchange for equity. This is to help startups grow within 3-4 months. Plenty of accelerators working in the development like GSF, TLabs, Prime Venture Capital, etc. Prime Venture Capital not only provides capital to businesses but mentors them to succeed. Committed to their business, they only invest in 45 companies per year. Prime Ventures is committed to working closely with startups when they first start. Direction: Helps to create technology-based businesses without focusing on a specific area. However, their current investments are in companies providing innovative solutions in the areas of logistics, fintech, healthcare, SaaS, B2B, and consumer goods."
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