Why Invest In Top-Performing Startups In India?

Invest In Top-Performing Startups In India

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.

What Is Startup Funding?

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. 

How Startup Funding Works?

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.

Different Types Of Startup Funding Stages

The process of startup funding is divided into different stages depending on the type of investment the startup requires. Here is the detail of various startup funding stages so that you can understand it: Pre-Seed Funding Pre-seed funding is the first stage of startup funding, and it is the early stage in which founders seek initial funding from investors. This funding involves an investment from friends, family members, supporters, and a network of other founders. Seed Funding It is the primary stage of funding any startup raises in exchange for equity. Among the other startup funding stages, seed funding is any startup’s early finance steps that help business owners conduct product research, hire a team, and market the products. Series A Funding Once the startup uses the funds raised during the seed funding, the next step is to raise new funds via series A funding. Series A funding involves traditional investors from private equity firms. Series B Funding Series B Funding round promotes business growth and reaching certain goals in a specific period. The capital raised during this startup funding stage is often used in expanding the workforce, boosting sales, and customer service. Series C Funding This type of startup funding round is for successful businesses needing extra business operations funding. Among all the startup funding stages, it is considered less risky as the businesses involved are profitable. Series D and Beyond Only a few startups conduct the series D and E round. Investors usually consider the market valuation before providing capital at these startup funding rounds. Only well-established with a considerable consumer base participate in series D and beyond funding rounds. IPO IPO is the last stage in which a business raises funds by making its share available for public purchase, and the IPO is used to generate further funds for the business’s growth. Various unicorns also participate in this stage, in which founders file IPO papers with market regulators. If you don’t know at which stage you should invest in a startup, we can help you with the right support. Stockify offers personalised guidance on various investment options to minimise the risk and support your long-term growth.

Types Of Startup Fundings In India

In India, startups get funding in different ways as per their requirements. Being an investor, you need to know when is the right time to get in front of potential startup owners. Here are the different types of startup funding in India: Self-Funding During the self-funding, founders fund their startup from their savings to support business growth. It also includes using personal savings for the startup’s early growth before participating in a pre-seed funding round. CrowdFunding CrowdFunding is one of the most popular startup funding in which funds are raised via the online crowd. During this funding round, startup owners use online sites with built-in audiences to support their funding needs. Loans Another option that startup owners are using is a loan. During this, microlending and personal business loans come into play with low interest and quick approval rates. Grants Simply put, grants are the unpaid funds allocated by government, non-profit, and corporate institutions as a financial reward. There is an eligibility criterion needed to be followed by startups to get grants. Private Equity Firms Startups with a good growth rate often go with private equity firms for funding. Unlike other types of startup funding, it involves a significant risk for both startups and investors. If a business fails, there are high chances you won’t get a return on your invested capital. Incubators & Accelerators Incubators and accelerators are a program for startup founders who cannot get funding from private equity firms, grants, and loans. These programs involve small investors that offer capital, mentorship, and guidance to business owners. If you want to diversify your investment portfolio, you can also choose unlisted shares that involve less risk. Buy unlisted shares of top-performing companies and diversify your portfolio.

How To Invest In Early-Stage Startups?

Ready to invest in startups? Wondering how does the process go? Fret not. Here are the tips you must keep in mind while investing in early-stage startups:
Venture Capital
The first option for you to invest in early-stage startups is using venture capital. These organisations collect funds from different investors and compile them into a single fund. It is considered the safe investment option for the early investor due to less risk.
Angel Investing
Most early-stage startups seek angel investors to facilitate their business operations, and it involves friends, family members, and acquaintances. To start investing, you can become an angel investor and invest at an early stage.
Crowdfunding
Another way to invest in an early-stage startup is through crowdfunding. Various platforms allow investors to analyse the performance of startups and also provide early access to participating in crowdfunding.

How Do Investors Make Money From Startup Funding?

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!

Advantages Of Investing In A Startup

A startup is a great way to become a part of business growth and earn long-term profit through equity, debt financing, and royalties. Many private equity firms like Apollo Global Management, Blackstone, and CVC Capital partners make a good return on their investment from early-stage startups. Here are the benefits of investing in a startup:
  • High growth possibilities
  • Long-term rewards
  • Investment portfolio diversification
  • Collaboration opportunities with entrepreneurs
  • High Potential for buyouts

Find The Right Startup For Investing With Stockify

Stockify is the trusted platform allowing investors to select startups and other investment options per their risk appetite. We primarily offer expert-based guidance in buying and selling unlisted shares by providing detailed insights into the company. Here are the reasons to choose Stockify at the time of investing in startups:
  • Detailed analysis of each startup
  • Team of certified financial advisors
  • Excellent customer support
  • Easy to signup and investing options
  • Update business figures

FAQ

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:

  • Seed funding
  • Series A funding
  • Series B funding
  • Series C funding

 

  • Seed funding
  • Series A funding
  • Series B funding
  • Series C funding
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Piyush Jhunjhunwala
Piyush Jhunjhunwala
CA, CPA, Ex. PepsiCo, Reckitt, Coty
CEO & Founder
Dubai, UAE.
Rahul Khatuwala
Rahul Khatuwala
Ex. Wipro & Finaco Founder
Co-Founder
Bangalore, India.