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How to Get Investors for Small Business Or Startup in 2022

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In this article, we’ll share some best sources on how to get investors for small businesses or Startups and discuss all of the points briefly.

India is full of diversity, and that’s why it is considered a subcontinent. India’s huge population is the biggest asset to starting any business. Small business in India has grown remarkably in the last few years.

Small businesses and startups will help boost India’s Indian economy and entrepreneurship. These small businesses are so important because 40% of total industrial output comes from these small businesses, and the central part of India’s export, around 45%, belongs to these small industries.

After agriculture, small business comes at 2nd spot in employing the Indian economy.

How to get investors for small business

In India, starting a small business and finding investors is not difficult, but convincing them is difficult. Every business idea needs strong financial support to roll out because if your business idea is not in investment shape, it will not succeed that much.

A successful killing idea is hitting your mind now. How do you implement it, and how do you get resources for this? Sooner or later, you need an investor to take your business idea to the next level and make your business financially stable.

How to Get Investors for Small Business Or Startups in 2022

We will show you several ways for finding and securing small business investors because getting the investor for your small business or your startup is like winning a half battle.

We will unpack the easiest way to get funding for your small business startup. We know that’s why you came here, so we won’t make you wait.

1. Friends & Family

Investment from Friends and family

Finding an investor in your family and friend circle is the easiest way because convincing someone who already knows you to invest in your business idea is an easier task than a stranger.

Your family knows your struggle and your passion for your idea, and the most important thing is that they believe in you. You only have to decide whether you want a loan from them or you want an investment fund.

A loan is a good option because you will pay it back over time with interest, and if they invest, they will become your partner in your business and share the risk with you.

Just remember one thing: if you are going to ask for help from friends & family, make sure to keep your personal and professional relationships as separate as possible by doing everything in writing.

Because your family & friends likely are not professional investors who know everything about risk.

Mixing business with relationships is sometimes hard because if the business fails and their money is lost, relationships may become complicated with your family and friends.

2. Angel Investors

investment from Angel Investors

Angel Investors is the golden opportunity for entrepreneurs seeking investment in their small businesses. Angel investors are wealthy individuals who offer a good amount of money in exchange for equity.

The benefits of angel investors are that they will not only invest their money but also give solid advice, mentorship, and access to their network of contacts.

The good thing about angel investors is that they make investment decisions quickly because they invest their own money. Some websites like funded.com, angel capital, and angel investment network, all of which have thousands of angel investors.

You will also find them in your local area by attending local startup events, chamber of commerce meetings, and fundraisers. It can be challenging to find an angel investor for your small business and convince them.

Still, if you are lucky enough to find someone ready to take some risks with you and ready to give his mentorship at its earliest stages, this could be a lifetime opportunity for a small business startup.

3. Crowdfunding

Investment from Crowdfunding

Crowdfunding is the new way to find an investor. Many crowdfunding sites give you access to many different kinds of investors.

A crowdfunding investment makes your business more noticeable and provides the startup with free marketing.

One of the benefits of Crowdfunding is that it can give early access to the capital you need to manufacture your product but is also required to fill a large number of orders.

There are four types of Crowdfunding. In each of them, you will get capital for your small business.

  • Donation – Donation-based Crowdfunding is when people are ready to invest in your business model in return for nothing.
  • Debt – debt-based donation is based on peer-to-peer lending. In this type of Crowdfunding, investors provide some loans that must be repaid-with interest by a specific deadline.
  • Rewards – When donors receive a gift in return for their investments, reward-based Crowdfunding. The size of the reward is based on the donation.
  • Equity – equity-based Crowdfunding allows investors to have some shares in return for investment. In this type of Crowdfunding, small businesses give some portion of their business in exchange for the capital they will receive.

The only difficulty is that many companies aim for Crowdfunding, so you have to be intelligent and loud to get that opportunity.

4. Bootstrapping

Investment from Bootstrapping

Nowadays, securing funding for a business is one of the biggest obstacles for small business owners. To solve this problem, some entrepreneurs choose a method called bootstrapping. Bootstrapping means starting your business with no venture assets or outside investment.

It is the process of relying on your savings. Money has to be borrowed in bootstrapping, and interest costs are reduced. It takes a lot of effort and dedication, and pure single-mindedness to achieve success this way.

Bootstrappers depend on their savings, personal debt, low or no interest credit cards, and lines of credit on their home.

Potential investors want to see you’ve strongly believed in your idea to invest your savings into it. Why should someone else believe in you with their money if you haven’t first proven yourself that you and your business are worthy enough?

The downside of this method is that if your business doesn’t succeed, you have to face a significant amount of debt that you need to manage.

5. Through Bank Loan

investment through Bank Loan

The bank is the first choice of the small business owners because they will find it a more reliable and easy way to get money for their business idea. Banks provide loans to small businesses in two ways, the first is a working capital loan, and the other is a term loan or funding.

The working capital loan is the loan they will use to buy short-term capital and investments. Most of the time limit is decided by hypothecating stocks and debtors.

Almost every public or private sector bank in India provides business loans for the small business industry. The interest rates and tenure for the amount vary from bank to bank.

In the USA, websites like Kabbage offer loans online for small businesses just by looking at real-life data, not the person’s credit score.

6. Govt Programs

Government Programs

The central gov of India has launched various startup schemes and loan schemes to boost the small business and startup ecosystem in India.

The government has launched. The central Government of India offers various credit schemes to strengthen the MSME (micro, small, & medium enterprise) sector.

This sector is in the 2nd position in creating jobs for the Indian ecosystem. There are many schemes by the Indian government for small businesses and startups; some of them are given below.

  • MSME Loan in 59 Minutes – the Indian government launched this scheme. The individual can get a loan from 1 lakh to 5 crores at an interest rate of 8.50% from public and private sector banks and NBFCs (Non-Banking financial companies) in just 59 minutes.
  • Pradhan Mantri MUDRA Yojana (PMMY) – under Pradhan Mantri MUDRA Yojana’s scheme, small business owners benefit from loans up to ` 10 lakh issued by banks under Micro Small Enterprises that are given without collaterals.
  • Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE) – CGTMSE was launched by the Indian government to provide collateral-free credit to the micro and small enterprise sector.
  • Credit Linked Capital Subsidy Scheme (CLCSS) – this scheme aims to boost the technology up-gradation of Micro and Small Enterprises (MSEs) in the country. It provides a 15% subsidy for purchasing an eligible plant, equipment, and machinery.

These are some of the well-known government schemes for small business owners. The Indian government and some state governments launch different schemes from time to time to boost the MSME sector.

Conclusion of How to get investors for a startup in 2022

Conclusion

It is to be said that there are many ways to bring your business. In this era, we all want to do something of our own, but the most significant difficulty we face is dealing with things we have no clue about.

This is not new and can be quickly resolved by searching in the right direction.

The above-mentioned six points will surely help you as a small-scale business owner to grow in a very efficient manner. Last but not least, a piece of very minimal advice will be to always keep your finances in check.

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