Funding Options to Raise Capital for Your Business

Angel Investors

Angel investors have scripted success for many small businesses with innovative ideas in India. They invest surplus cash in businesses in exchange for a certain return on their investment. Operating individually or in groups, angel investors have a higher risk appetite.

Venture Capitalists

Procuring funds from venture capitalists needs an intriguing business idea. They usually invest in businesses against equity. Seeking funds from venture capitalists has a dual advantage. Along with funds, venture capitalists can provide guidance and act as mentors. Their experience can be useful for small businesses.
Though venture capitalists invest on a large scale, they seek returns within a short time (3-5 years). Hence, business owners should target generating high returns within a considerably short time period, if they want funding from venture capitalists.

Additional Read: Factors that determine the financial success of your business

Non-Banking Financial Companies (NBFCs)

NBFCs have changed the lending landscape post the 2008 financial crisis. While the lending norms of NBFCs are not as rigid as banks, the innovative service offerings by NBFCs are a value addition for the borrowers. Generally, their business loans are collateral-free, which is a big bonus for small businesses.

Business Incubators and Accelerators

These are ideal for the early stages of business. Various innovative ideas originating from academic institutions like business schools and engineering colleges can get a large degree of nurturing and guidance from business incubators and accelerators. IIMA's CIIE is a case in point. It helps entrepreneurs turn ideas into viable businesses.
Companies like Dropbox and Airbnb are products of incubator and accelerator support

Government Programs

The Indian Government is doing its best to make the economic climate more hospitable for businesses. Under the Pradhan Mantri Mudra Loan Yojna, loans are available in the following three categories:
Sishu (Max Rs. 50,000)
Kishor (Max Rs. 5 lakh)
Tarun (Max Rs. 10 lakh)

Under the program, businesses can avail funds according to their needs. The corpus of the program has grown manifold since its launch in 2015.
With so many financing options, businesses are spoilt for choice. Choosing the right option is crucial for business owners to maintain the stability of their venture. It also helps to them to tap existing opportunities and take their venture to the next level.