This paper presents the burgeoning growth of start-up companies, difficulties raising money because they are unknown and untested, and the probable sources of their financing with the emphasis on venture financing in India. The paper aims to focus on the process of obtaining startup funding/ financing and the requirement for raising capital. It discusses the importance of raising capital from bootstrapping, friends and family as well of personal financing in the early stages of starting up. Further, the paper discusses various forms of creative funding and equity or debt funding that these firms can avail and the ever growing need of preparing to secure these types of financing/funding has been explored. It aims to explore whether our country has enough arrangements to fund the ventures that have the potential for scaling up in the coming times. The paper aims to discern into the profuse funding being arranged for the startups in our country, by that backing any research in this respect. Also, internationally, there is more and more research associated with the importance and ways of financing/funding the startups. Thus, the advances made by India so far and the regulations and incentives formulated by the Government of India have been discussed here under.
KEYWORDS: Angel, Venture Capital, Bootstrapping, Commercialization, Startup, Equity Funding.
Introduction Startups generally have a huge challenge in raising capital for the reason that, they are untested and unknown. The Startup founders try to secure grants, use their own money, and take the help of friends and family. The effort for raising money is often quite taxing for these startups. The startup founders hear “no” plethora of times before they are able to obtain funding. It stresses on the ways and processes of getting funding or financing. Although a startup may need to raise funds for survival, but they generally don't wish push around people who care less about their long term goals.
When our honorable prime minister Narendra Modi declared the $1.5 Bn Fund of Funds for Startup ventures (FFS) in his Startup India Plan, it appeared like paper promise only. But, the aspirations of many young entrepreneurs of India got boosted, when on June 22, 2016, the Union Cabinet literally sanctioned it and made SIDBI responsible for the disbursement. According to October 2017 status report by DIPP, “the Startup India website, about $92 Mn (INR 605.7 Cr) from the fund has been released to SIDBI, and 75 startups got funding from 17 AIFs by far. The Fund has been set aside to get allocated across two finance commission cycles.” (2015-2020 & 2021-2025)
According to a notification of The Ministry of Commerce and Industry released a notification on April 1, 2015 defining a startup. According to it, “an entity will be identified as a startup
