Modes of Funding

Depending on their stage of development, sector, and business strategy, startups can obtain fund through a variety of channels.

Here are a few ways that startups can raise fund.

Types:

BOOTSTRAPPING:

This process entails using personal resources, earnings from the firm, or money from friends and family to finance the startup. Bootstrapping enables founders to maintain total control over their business but may restrict the scope and rate of expansion.

The initial financing that entrepreneurs get from investors, typically in the early stages, is known as “seed funding.” It aids in the creation of their teams, market research, and product development. Investors receive a portion of the company in return.

ACCELERATOR & INCUBATORS

These initiatives give entrepreneurs funds, mentorship, workspace, and other resources in exchange for equity. They are made to hasten startup growth and development over a predetermined time frame, often a few months.

CROWDFUNDING:

By using internet channels, crowdfunders may help startups raise fund from a huge number of people. Crowdfunding can take many different forms, including reward, equity, and donation based.

VENTURE CAPITALIST & ANGEL INVESTORS: Venture capital (VC) firms finance start-ups in return for stock. Startups with a strong potential for growth are more likely to attract VC funding.

Angel investors are people who put their own fund into start-up businesses in exchange for stock or convertible debt.

Nishanth KR

Business Analyst

Cultiv8