India's startup ecosystem is booming with innovations and passion that has made the country to be the third largest when it comes to market size. Inevitably, it has attracted a lot of investors to the industry as the returns and the revenue will be humongous if the startup becomes successful. However, starting a business and expanding it is a humongous task.
The amount of uncertainty and risks involved makes it difficult to get funding for a business. The first thing that you need before starting a business is seed funding. It is the total sum of money that you need to cover the expenses related to expansion, product development, market research et cetera.
Amongst the different stages of funding that every startup has to go through seed funding can be considered as the initial stage. The major intention of the very idea of seed funding is to obtain enough working capital so as to start the business grinding. There is absolutely no doubt that seed funding is the default process of any business.
How to Raise Seed Funding for your Startup?
The right kind of pitching to the right person or company at the right time is the popular and yet the secret ingredient behind finding an investor to fund your startup. You might not get your pitch approved on the first try. However, always remember that every interaction with a prospective investor is an opportunity to improve yourself. Here are a few places where you can approach to get seed funding for your startup.
Startup India Seed Fund Scheme (SISFS)
Startup India Seed Fund Scheme is an initiative by the government of India that aims at improving entrepreneurship across India. By recognising the need for capital at the nascent stages of an enterprise they provide financial assistance to startups.
It covers areas like content development, prototype development, product trials, market entry and commercialisation.
This scheme ensures that they facilitate the entrepreneurs to shape their startups in such a way that they will be capable of raising investments themselves from venture capitalists, angel investors or through loans.
This initiative by the government of India is under the Department for Promotion of Industry and Internal Trade or DPII. Their call for applications is open throughout the year.
NIDHI-Seed Support System (NIDHI-SSS)
The National Initiative for Developing and Harnessing Innovations – Seed Support System or NIDHI – SSS of the Department of Science and Technology hosts seed funding with a corpus of 10 crores under the Entrepreneurship Development Centre.
They provide financial assistance to those startups that have with them; promising ideas and technologies. This Seed Support System is considered to be a bridge for the startup between its development and commercialisation.
The financial assistance includes product development, testing, test marketing, mentoring, professional consultancy, IPR (Intellectual property rights) issues et cetera. The selected startups are incubated at the venture center and must have completed three months of residency at the place during the time of seed fund investment.
Idea2PoC is the scheme of startup policy of the government of Karnataka. Under this scheme, startups receive early-stage funding for their ideas and concepts that are yet to be released.
With the objective of encouraging innovators to commercialise their inventions, the scheme gives grant in aid up to 50 lakhs rupees. The fund is released as per their requirements and milestones of the project that are agreed upon in the memorandum of agreement that is signed between the respective startups and the Karnataka Biotechnology and Information Technology Services (KBITS)
Realising the need for a reliable help center to facilitate seed funding for the budding startups. Seedfund was established in the year 2006 by Bharati Jacob, Mahesh Murthy and Pravin Gandhi.
After being joined by Paula Mariwala and Sanjay Anand Ram, they have revolutionised the investment experience for a plethora of startups. They have seeded diverse startups belonging to different sectors across India. Red bus, Car Wale, Jeevanti and Valsalya etc are a few popular startups funded by them.
Khosla Ventures was founded in 2004 by Vinod Khosla and this firm provides venture assistance and strategic advice to those entrepreneurs who are working on breakthrough technologies.
One thing that makes them stand out from the rest of the firms of their kind is its broad range of areas that covers, including consumer, enterprise, advertising, financial services, big data, agriculture, robotics, sustainable energy et cetera.
For a person who has an amazing idea that has significant potential with a strong team then Khosla ventures will be an excellent option.
You can find angel investors who are accredited investors with a high net worth and a passion for investment. Mostly these people will be working towards diversifying their portfolios through investments in startups.
Apart from funding, their experience in the industry will also give a clear understanding to the entrepreneurs about the timelines required, the funding required and the mismatches in your nascent plans
Friends and Family
Apart from the government, investors and corporate firms, family and friends of the entrepreneur can also invest in the startup. It is one of the most common ways in which people obtain seed funding recently. The flexibility with the timeline of repayment is one of the most important factors that has popularised this form of seed funding.
Cloudfunding is another popular form of gaining capital for seed-stage startups. Today there are more than 500 websites that help entrepreneurs to raise crowdfunding for their startups.
A website named Kickstarter is one of the most popular websites for people looking at the source of obtaining seed capital. According to various reports, this website raises billions of dollars through them for various startups.
Getting a clear idea of your business and seeing it materialise and expand is a dream come true for all entrepreneurs. Getting the seed capital is the foundation for all the dreams that they have built.
One thing that is to be kept in mind before venturing into any of these options for procuring funds is to have a clear formal business plan. The entrepreneurs should have a very clear idea regarding the product, product development and project timeline.
Another thing to be noted is that seed funding is only for the initial stages but for the years to come as well. An entrepreneur who makes strategic plans should be able to make use of the initial fund to be capable enough to raise for their investments on their own.
How many rounds of funding can a startup take?
A startup can receive as many rounds of funding as possible, there is no restriction on it.
How to raise seed funding for Startups?
Angel Investors, Family and Friends, Crowdfunding, Incubators, and Accelerators are some of the common ways to raise seed funding for your startup.
Why do startups raise funding?
Startups usually raise funding to expand an grow their startup.