The startup ecosystem in India allows founders to get the required funding from potential investors. In the first quarter of 2023, Indian startups raised $2.8 billion from different investors. If you are interested in startups and how they can impact society, you should consider investing in startups in India. Get expert assistance in selecting the right startup for investment at Stockify. Connect with us and become an early investor in the profitable startups of India.
Startup funding is the money an entrepreneur requires to launch a business successfully. It is the process in which startup founders conduct the funding rounds and offer a few percent of stakes to the investors. Apart from business owners, startup funding is equally important for investors as it is an excellent opportunity to become a stakeholder in emerging startups.
In simple words, startup funding lets the business owners get the required funds to boost the startup. During startup funding, investors look for various things like business market valuation, percentage of equity shares, and business models. Startups looking for funding usually start from the seed funding and continue till series A, B, and C rounds. Before starting any round, investors consider metrics like profit, loss, and risk associated with the business. If you are an inexperienced investor, you should analyse financial records and other metrics in advance. That’s how you will get a good return on your investment while minimising losses.
Before you start investing in money, you should have a better idea of what ways you can make money. At Stockify, we share every possible way to make your investment more viable and profitable. Primarily, investors make money from startup funding in different ways:
Equity
Equity is the small percentage of ownership an investor gets in the startup. Startup founders offer equity shares in different funding rounds in exchange for capital. So purchasing equity is also one of the best options to manifold your investment.
Debt Financing
Another way you can earn money from startup funding is through debt financing. Investors offer debt to the business, sometimes at a certain interest rate. It is considered a safe option as you will get a certain interest rate percentage after a particular time.
Royalties
You can also make money from early startup funding through royalties. In this, you agree to offer funds to startup founders based on their forecasted business revenue. During this, investors get their money back through royalties, the percentage of a company’s revenue.
Apart from this, you can also generate revenue by buying unlisted shares of startups. In the future, when a particular company is listed on the stock market, you can earn a significant return on investment. Connect with the best unlisted share brokers in India to buy Pre-IPO stocks of startups now!
An individual in the form of angel investors, private equity firms, and venture debt firms can invest in the startups.
The popular sources of startup financing are bootstrapping, crowdfunding, angel investing, venture capital, and private equity firms.
Seed investment is an early form of investment in which business owners raise funds from friends and acquaintances.
Investing in a startup allows you to become a part of business growth and diversifies your investment portfolio.
Under section 80 IAC of the income tax act, startup funding in India is taxable.
GST is applicable for startup funds in India, for which companies must be pre-registered for taxes.
The four stages of startup funding are as follows: