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 lineage of any business. The long, arduous but exciting journey from an idea to an income-generating business requires the fuel of capital. This is why, at almost every stage of the business, entrepreneurs ask themselves the question “How to finance a startup?” If you are wondering how to raise money for your business, Abhinav Sherwal, Co-Founder, Recur Club, suggests the 5 best fundraising ways and channels for businesses that you can use.
Suggesting subscription funding, Abhinav Sherwal said: âThere is a silent revolution underway that is leading to innovative, fast and reliable funding options. Financing alternatives have emerged for SaaS companies, conventional external equity and debt. Subscription financing is a mortgage taken out using a personal fund, secured against the buyers’ dedicated capital, usually without recourse to the underlying investments of the fund. Investors are interested in the concept, signing up and committing to put money into the financial instrument, before the actual purchase closes. It is especially perfect for SaaS business ventures and recurring revenue companies and primarily focuses on customer retention rather than customer acquisition. It is the most valuable asset that one can use to increase capital and also, it will increase the customer’s lifetime value. It’s a great way to control the flow of funds. This reduces the frequency of capital calls, thereby reducing the executive’s workload. One of the subscription funders, the Recur club provides funding to organizations to accelerate immediate capital growth without diluting capital or incurring debt. They unlock the trading limit within 48 hours by connecting financial and billing data and allow businesses to convert monthly paying customers to annual paying customers. Organizations with a stable income can negotiate contracts on the Recur platform and receive initial capital. Recur aims to democratize fundraising, and as a promise with this idea. “
When listing your shares / IPO, Sherwal adds: âSelling shares on the stock exchange helps raise capital and is also a sign of reputation. You cannot start selling stocks on the two major exchanges in India, BSE or NSE, and ask them to go public. First of all, this is a necessary legal process for an Initial Public Offering (IPO). Then you need to navigate the trading process before you finally start trading. Initial listing improves 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.
Speaking about angel investing, he said, âAngel investing is a type of private investing where high net worth investors try to get a higher return by taking more risk than by investing in the open market. Angel investors can be savvy entrepreneurs and may have knowledge or experience in the industry in which they are investing. In addition to investing in capital, they can provide advice, networks and knowledge to startups. There are several platforms offering funding such as Indian Angel Network, Velocity, Angel, etc. but IAN is different among them all. They offer high quality tracking, extensive networks, and game changers for strategy and execution. Their experience and knowledge helps to assess potential and risks at an early stage. In addition to funding, the network provides access to mentoring, an angel investor network and advice. “
Regarding the working capital loan method, he adds, âA working capital loan is a loan that you receive to finance the day-to-day operations of your business. These loans are not used to buy long-term assets or investments, but to provide capital to meet the short-term operating needs of the business. These needs can include costs such as salaries, rent, and debt repayment. Therefore, a working capital loan is simply a business loan that a business 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 business. Some working capital loans are unsecured. In this case, the company does not need to post collateral to secure the loan. One of the best choices would be SBI business loans. They represent a business opportunity for MSMEs. The main purpose of SBI Small Business Simplified Loans is to help small businesses create capital asset cap. To qualify for this loan, you must have 5 years of commercial existence with a checking account in any bank within the last 2 years and a minimum average monthly balance of Rs 1 Lakh. “
Suggesting the Business Accelerators method, he explained, âStartup Accelerator is an organization that provides mentorship, capital and relationships with investors and business partners. Designed to grow quickly for selected startups with MVPs and up-and-coming founders. Global Accelerator energizes entrepreneurs and startups with a supportive ecosystem and abundant new funding. The program offers mentorship and capital in exchange for equity. This should help startups to grow within 3-4 months. Many accelerators working in development such as GSF, TLabs, Prime Venture Capital, etc. Prime Venture Capital not only provides capital to businesses, but supports them to succeed. Committed to their business, they only invest in 45 businesses per year. Prime Ventures is committed to working closely with startups from their start-up. Direction: Support for the creation of technological companies without focusing on a specific area. However, their current investments are in companies offering solutions in the areas of logistics, fintech, healthcare, SaaS, B2B and consumer goods. “