Capital is the first thing you need to deal with when starting a new business. Despite the fact that entrepreneurs and existing mid-sized businesses find it challenging to raise funds for their business, without it the business cannot grow. To raise capital for your business, pitch investors.
Those investors will then view your business idea and understand if it's a good idea, they will invest in your business, you will receive funding and your business will grow. In order to obtain funding for your business, you should register yourself at Venture Uplift, where you can pitch potential investors. They will definitely provide funding if they are interested in your business idea.
If you're an entrepreneur looking to expand your business but you don't have the money to do so, then you should read this post until the end. The topic of How to raise capital for business growth is particularly relevant to new entrepreneurs who don't know how to do it. The following methods are the best ways to raise money to expand your business:
In order to run a business, you must identify how much-fixed capital and working capital is needed. Due to a lack of cash flow, a number of profitable businesses closed. You will default on the payment if you have profit in your accounts but no cash on hand. Consequently, you will lose market reputation.
Capital is divided into two categories: equity and debt. It is called debt capital because it entails the business owner taking on debt in exchange for the funds provided. An example of this would be a bank loan. Funding is provided to a business owner on the understanding that the loan will be repaid with interest. Equity capital, on the other hand, does not need the business owner to take on debt. Rather, investors purchase a portion of the company (equity) without requiring the owner to repay the capital.
Risk capital is another name for equity capital. Anyone who invests in your company's equity capital is taking a risk. The businessman and the investor will benefit if there is a profit. If there is a risk, however, it affects both the businessman and the investor. Here are some methods for raising equity capital:
Exporters can raise funds through a variety of government initiatives. For example, at banks, you may acquire exporters access to the cheapest line of credit.
IIFL and other financial institutions provide startup capital, early-stage capital, and various additional funding to start-up entrepreneurs.
Small business owners, such as shopkeepers, are not eligible for bank loans since they do not have income tax records. NBFCs provide flexible term loans such as working capital loans and business loans to such business owners. These are unsecured loans that do not require any type of collateral, such as a house, land, or shop. These loans are given based on the businessman's assignment.
They receive venture funding from IIFL's seed funds. Financial Firms can provide early-stage capital if your company starts to grow from one level to another.
It is a smaller version of the stock market where small businesses can be listed. These funds are given to businesses that are progressing from one level to another. When the value of companies listed on the OCT Fund rises, they are listed on the Bombay Stock Exchange (BSE) / National Stock Exchange. For example, if you want to list a company on the BSE or NSE, your profit must be at least Rs 50 crores.
If you have a profit of Rs 5 crores and wish to list on the BSE/NSE, however, you should list your company on the OTC first. When your company becomes large enough, it will automatically transfer to or become listed on larger stock markets such as the BSE/NSE. Seed funds, friend/relatives funds, Angel investors, and OTC are all viable methods for raising equity.
You can raise equity money from the BSE/NSE, international stock markets, overseas investors, and mutual funds as your company grows. You can conduct a private placement first, then a listing, or vice versa, with the support of these investors.
Debt capital, as mentioned before, involves taking on debt in exchange for real money. It is essentially a loan from a bank or financial institution, typically with the expectation that you will repay it according to the agreed terms and conditions, with interest. Our discussion will focus on the unique benefits of debt capital and how to access it.The following are some of the ways debt capital is raised:
An unsecured long-term debt instrument issued by a government or corporation for the purpose of financing its operations. An investor who has become a creditor to the issuer is rewarded by an interest income. Borrowers of these loans typically borrow unsecured from the public for a long period of time, usually exceeding ten years. The creditworthiness and reputation of the issuer are what support debentures since they have no collateral backing. If your company's credit rating is strong or higher, you can raise funds from the general public. Investor bankers can assist you with debenture financing. You will pay less for this money, and the terms are equally favorable.
The term foreign direct investment (FDI) refers to an investment by a party in one country into a company or business in another country with the intention of establishing a lasting relationship. Foreign direct investment differs from foreign portfolio investments, which are passively owned by investors. Foreign direct investment can be made by acquiring a permanent interest or by expanding one's business abroad. With the support of numerous government schemes, FDI may enter many sectors immediately, and no clearance is necessary for the industries.
Small companies can obtain FDI from the following Mediums:
Consider a small export business where you are trusted by a foreign buyer. This will enable him to directly invest in your business. If he is satisfied with the quality of your products, then he will do long-term business with your company. This is called strategic foreign investment.
If you know a Non-Resident Indian (NRI ) who trusts you and wants to invest in your company, you will be able to attract foreign direct investment.
If your company is large enough, an investment banker can help you obtain FDI. The investment banker investigates the viable company and writes a report and presentation as a result of the investigation. The investment bankers then meet with people who are interested in investing in these companies.
If you are interested in investors, you would need to register with Venture Uplift and pitch to them. Create an account and post your business idea. Investors may invest directly in your company if your business concept is profitable.
