If you go by past decades, you will find that the startup ecosystem of India has flourished in the market size. This became the definite reason for innovations and businesses from India getting a lot of attention from investors. It is much of a fact that the success of any new idea depends upon the resources and the right market timing. But the most important is seed funding. Startups have to go through this crucial phase in their infant stage of business growth. So today we will know the importance of seed funding for startups in India.
There are different phases that every startup has to go through in terms of fundraising. These phases define the current stage of businesses standing currently. In the initial stages, there is a restriction on fundraising to seed capital and pre-seed investments with a series of stages of growth. The process of seed funding takes place during different stages. The main aim of this is to provide ample working capital to let them rise from the ground level. No doubt, it is one of the key processes that lay the foundation of a robust startup with its success.
Seed funding can also be defined as seed capital or seed money. The word ‘seed’ is enough to indicate to you about the growth of the plant. So when we refer to seed funding, it means the need for ample funds for the growth of a startup business. Take an example, you plant a seed and nurture it with the proper amount of water to let the plant grow, similarly, the startup is like that plant which needs proper funding. This is where the concept of seed funding has evolved. This brief explanation with examples must have cleared you of the meaning of seed funding. But there must be a question in your mind about raising seed funding.
Different Sources Of Seed Funding
There are different sources of seed funding where a startup firm can get help for acquiring ample funds for its project.
Generating revenue is one of the best ways to raise seed funding for the startup built-up. Currently, this method has become much more important as it does not get into the complexities of diluting stake or external funding. Crowdfunding is also a variation of this popular funding process, where a product is displayed to investors via different developmental stages. There are around 500 active crowdfunding platforms currently and are known to be the prominent seed funding avenues.
Bootstrapping is also a very popular method of seed funding. Here savings and personal wealth are put by the founders for seed capital. Popularly named bootstrapping, this creates a lot of pressure of finance, but not much for founders in returning borrowed money.
Angel Investors And Startup Incubators
Angel investors also initiate seed funding by investing small amounts in the startup company in its infant financial stage round. Startup incubators also play an important role in helping with seed funding and providing office space and startup management training.
Another very important angle to know is building a marketplace startup. For this, you have to opt for a workable industry and explain your unique value proposition. Market size must need to be assessed. A distribution model should be created by you and selecting the appropriate business model with an economics analysis. You should come up with a 10X best product. Trust must remain between two sides. At last, shelter and enhance your startup empire. So these are all the important facts that I have mentioned in this blog. Startup Paisa is also a very helpful gateway that can help in providing seed funding for startups and can boost hope to rise higher.