Starting a business is exciting, but let’s be honest, one of the biggest challenges for any entrepreneur is getting the money to make it happen. You might have a great idea, a solid plan, and the passion to hustle, but it’s tough to get off the ground without capital.
In India, the startup ecosystem is booming. The Startup India initiative, launched by the Government of India, has provided policy reforms, funding opportunities, and incentives that support business growth.
But before you jump into fundraising, ask yourself:
- Have I validated my idea?
- Do I have a business model that can make money?
- What stage is my startup at?
The answer to these questions will determine which funding option suits you best. Whether you’re just starting, trying to scale, or looking for serious investors, there’s a way to get the capital you need. Let’s break down 12 different ways you can raise funds for your startup in India.
Table of Contents
1. Investments from Close Network
Borrowing from family or friends is a common, accessible way to raise capital. Treat it as a professional transaction: document with a loan agreement or promissory note (amount, rate, repayment schedule, default), and clarify whether the funds are loans, convertible instruments, or equity, since that affects taxes and the cap table. You may seek legal review or templates and include an exit or conversion clause if applicable.
Pros:
- Easier access, fewer formalities.
- No high-interest rates, flexible repayment, and retain control.
Cons:
- Blurring the lines between personal and professional can cause tension.
- Without a formal repayment plan, misunderstandings may arise.
Even with convenience, clearly define terms and repayment to prevent conflicts.
2. Government Schemes
India offers funding programs to nurture startups- financial support, mentorship, incubation, and networking. To find grants, search the Startup India portal, state portals, and incubator sites; assess eligibility and prepare concise impact statements for applications. Many states run seed funds; check your state portal and SISFS guidelines when applying.
Notable schemes:
- Stand Up India: financial support for women and SC/ST entrepreneurs.
- MUDRA Loan Scheme: microloans for small businesses and startups.
- Atal Innovation Mission (AIM): supports innovation, research, and technology.
- Startup India Seed Fund Scheme (SISFS): funding for early-stage prototypes and trials.
These schemes help startups in underserved areas, including rural, women-led, and SC/ST ventures.
3. Find an Angel Investor
Angel investors are high-net-worth individuals who provide early-stage funding in exchange for equity. Unlike traditional loans, angel investors take a risk by investing in startups with high growth potential and usually play an active role in mentoring and guiding founders.
Pros:
- Angel investors often invest at an early stage when other funding sources are unavailable.
- They provide valuable industry insights, mentorship, and business connections.
- No immediate repayment pressure, unlike bank loans.
Cons:
- Startups must give up equity, meaning they lose a portion of ownership.
- Investors may expect significant growth and returns, putting pressure on founders.
Prominent angel investors in India include Rajan Anandan, Sanjeev Bikhchandani, and Kunal Shah, who have backed several successful startups.
4. Venture Capitalists
Venture Capitalists (VCs) are investment firms that provide funding to startups in exchange for equity. Unlike angel investors, who invest personal wealth, VCs manage pooled funds from multiple investors and invest in startups with high scalability and strong market potential.
Funding Rounds: Seed → Series A/B/C
Seed rounds fund product-market fit and an MVP; Series A focuses on scaling repeatable growth; Series B and later rounds support expansion and market reach. Investor expectations vary: Seed stage seeks an MVP and early users; Series A focuses on repeatable growth and unit economics; Series B and beyond emphasise scaling metrics and team/operational readiness.
Pros:
- Provides substantial capital for expansion and scaling operations.
- VCs bring strategic expertise, networking opportunities, and mentorship.
- Helps in securing additional rounds of funding from institutional investors.
Cons:
- Startups must give up a significant stake in their company.
- Venture capitalists expect aggressive growth and high returns, which may alter the startup’s long-term vision.
Prominent VC firms in India include Peak XV Partners, Accel, and Z47, which have backed companies like Swiggy, Ola, and Zomato. To attract VC investment, startups must demonstrate strong traction, a proven market fit, and a scalable business model.
5. Bank Loans
Bank loans offer an alternative financing option for entrepreneurs who prefer to retain full ownership of their startup. Indian banks offer various loan programs for startups, including working capital loans, MSME, and term loans.
Pros:
- Retain 100% ownership without diluting equity.
- Structured repayment terms allow businesses to plan their finances.
- Government-backed loans for startups have lower interest rates.
Cons:
- Requires collateral or personal guarantees for traditional loans; however, government-backed schemes often offer collateral-free options for eligible startups.
- Banks prefer businesses with a solid credit history and financial track record.
Programs like SBI’s Startup Loan, SIDBI’s Growth Capital Scheme, and the MUDRA loan program offer startups financial support to establish and expand their operations. However, securing a loan requires a strong business plan, revenue model, and repayment capability.
6. Startup Incubators and Accelerators
Startup incubators and accelerators provide mentorship, office space, networking opportunities, and early-stage funding. These programs help founders refine their business model and gain access to investors.
Pros:
- Provides structured mentorship and hands-on guidance.
- Startups gain exposure to potential investors and industry experts.
- Often includes seed funding and office space.
Cons:
- Highly competitive selection process.
- Some programs take equity in exchange for support.
Popular incubators and accelerators in India include T-Hub, NSRCEL (IIM Bangalore), Y Combinator, etc. These programs are particularly beneficial for first-time founders looking for structured support and networking opportunities.
Looking for a company registration service? Get started with Razorpay Rize’s Company Registration now!
7. Crowdfunding
Crowdfunding takes three common forms: reward (pre-sales or rewards), equity (sell shares), and donation (charity/social causes). Use rewards for consumer products and validated prototypes, equity when offering ownership, and donations for social or health causes. Reward campaigns validate market demand, donation drives build community, and equity platforms expand investor reach.
Popular Crowdfunding Platforms in India:
- Ketto – For social causes, healthcare, and creative projects.
- Milaap – Focused on community-driven initiatives.
- Wishberry – Best for creative and artistic ventures.
Crowdfunding is ideal for social impact startups, creative businesses, and consumer product innovations that resonate with a broad audience.
Two common crowdfunding types to consider:
- Rewards-based crowdfunding: Best for product launches and community validation.
- Equity crowdfunding: Raises capital in exchange for shares; check platform investor limits and compliance.
Verify platform compliance and investor protection rules before launching; platforms must follow applicable securities rules.
8. Bootstrapping (Self-Financing)
Bootstrapping involves funding your startup from personal savings or through revenue generated by the business. This approach ensures that the founders retain complete control over their business.
Pros:
- No external interference or equity dilution.
- Allows for complete ownership and autonomy.
Cons:
- Limited resources can restrict growth potential.
- Financial risk is entirely borne by the founders.
Bootstrapping is ideal for early-stage startups with limited budgets, but it requires careful financial management.
9. Freelancing
Freelancing is another option for entrepreneurs to fund their startups. By offering freelance services based on their skills, founders can generate immediate income while building their businesses.
Pros:
- Provides immediate income to sustain the startup.
- Flexible work schedules allow entrepreneurs to focus on both freelancing and business development.
Cons:
- The income might be inconsistent and may not be enough to scale quickly.
- Balancing freelancing and business growth can be time-consuming.
Freelancing can be a short-term solution to support the early phases.
10. Grants & Competitions
Grants and startup competitions are excellent non-dilutive funding options. Winning a competition or securing a grant can provide financial support and credibility.
Pros:
- Grants don’t require equity in exchange for funding.
- Competitions can help build a startup’s reputation.
Cons:
- The application process can be highly competitive.
- Winning doesn’t guarantee long-term success.
11. Strategic Partnerships
Strategic partnerships with larger companies or other startups can provide access to resources, expertise, and new markets. These partnerships often include joint ventures or co-marketing agreements.
Pros:
- Access to new markets and business networks.
- Potential to scale faster with shared resources.
- Cost savings by sharing resources.
- Increased innovation and competitive advantage.
- Enhanced brand reputation and credibility.
- Risk mitigation through shared responsibility.
Partnerships are a great way to use the expertise and resources of established businesses while growing your startup.
12. Revenue-Based Financing
Revenue-based financing (RBF) is a funding model where startups receive capital in exchange for a percentage of their ongoing gross revenue. Repayment continues until a pre-defined total amount—often a fixed multiple of the initial investment called a ‘cap’—is repaid, allowing founders to know the loan’s total cost upfront.
Pros:
- No equity dilution, as you retain full ownership.
- Flexible repayment terms based on your business’s revenue.
Cons:
- Higher repayment amounts compared to traditional loans.
- Not suitable for businesses with low or unpredictable revenues.
Platforms like Velocity and GetVantage offer revenue-based financing in India.
Choosing the Right Funding Option for Your Startup
Raising funds should fit your startup’s needs and long-term vision. Different options have trade-offs, and what works for one scenario may not work for another.
Ask these key questions:
- What stage is my startup in? Idea, validation, or scale?
- What is my business model? Does it require upfront investment (manufacturing) or can it generate revenue early (freelance, SaaS)?
- How much capital do I need? A slight boost or a scalable round?
- Am I willing to give up equity? Dilution vs complete control.
- How soon do I need the money? Quick options (crowdfunding, angel investors) vs. slower bank loans or government schemes.
Not all funding is created equal. Some options address short-term needs, while others enable long-term growth.
- Urgency of cash
- Willingness to dilute
- Revenue predictability
- Need for mentorship/market access
- Collateral/credit history
- Regulatory/sector fit
Stages of Startups to Raise Funds
After your startup registration is completed and as your startup grows, its funding needs evolve, and the strategies used to raise capital change accordingly. Each stage of your startup’s life cycle has different funding requirements.
Pre-Seed Stage
At this stage, entrepreneurs are still refining their ideas and testing assumptions. Funding typically comes from personal savings, family and friends, bootstrapping, grants, and early-stage incubators or accelerators.
Seed Stage
In the seed stage, entrepreneurs validate their idea with proof of concept (POC). Incubators, government schemes, angel investors, and crowdfunding are common sources of funding.
Series A Stage
Series A funding is for startups that have proven their concept and need capital to scale operations. Venture capitalists are key investors during this phase.
Series B, C, D, and E
At these stages, startups have demonstrated growth, and funding is used to expand further, hire new teams, and enter new markets.
Exit Stage
The exit stage means selling the startup, merging with a larger company, or launching an IPO, signalling a transition to an established business. IPOs are more selective, favouring predictable cash flows and strong compliance. M&A activity is increasingly strategic, with micro-acquisitions offering a cost-efficient path for flexible growth.
Case Studies: Success Stories of Fundraising by Indian Startups
- Paytm raised funding from investors such as One97 Communications and SoftBank.
- Zomato used venture capital and strategic partnerships to expand globally.
- Ola secured funding from SoftBank and others to become a leader in the ride-sharing market.
Frequently Asked Questions
Private Limited Company
(Pvt. Ltd.)
- Service-based businesses
- Businesses looking to issue shares
- Businesses seeking investment through equity-based funding
Limited Liability Partnership
(LLP)
- Professional services
- Firms seeking any capital contribution from Partners
- Firms sharing resources with limited liability
One Person Company
(OPC)
- Freelancers, Small-scale businesses
- Businesses looking for minimal compliance
- Businesses looking for single-ownership
Private Limited Company
(Pvt. Ltd.)
- Service-based businesses
- Businesses looking to issue shares
- Businesses seeking investment through equity-based funding
One Person Company
(OPC)
- Freelancers, Small-scale businesses
- Businesses looking for minimal compliance
- Businesses looking for single-ownership
Private Limited Company
(Pvt. Ltd.)
- Service-based businesses
- Businesses looking to issue shares
- Businesses seeking investment through equity-based funding
Limited Liability Partnership
(LLP)
- Professional services
- Firms seeking any capital contribution from Partners
- Firms sharing resources with limited liability
Frequently Asked Questions
What are the different ways to fund a startup?
Here are some methods that can be suitable for young entrepreneurs:
- Bootstrapping: Using your own savings or pocket money to fund your idea. This is ideal for early-stage ideas that don’t require a significant investment.
- Crowdfunding: Platforms like Kickstarter, GoFundMe, or Ketto allow individuals to raise money by pitching their ideas to the public and gaining small investments from many people.
- Angel Investors: If you have a compelling business idea, you may seek angel investors who are willing to invest in exchange for equity.
- Family and Friends: You can raise funds from your personal network, like parents, relatives, or friends who trust your vision.
- Government Schemes: In India, various government schemes, such as Startup India, offer support to entrepreneurs, including mentorship and grants.
- Incubators & Accelerators: Some programs specifically support entrepreneurs by providing seed funding, mentorship, and resources.
Which funding is best for startups?
The “best” funding option depends on your startup's stage, business model, and what you want to achieve. Here’s a breakdown:
- For Early-Stage Startups:
- Angel Investors
- Bootstrapping
- Government Grants
- Crowdfunding
- For Growth Stage Startups:
- Venture Capital (VC)
- Bank Loans
- For Scaling and Large Expansion:
- Revenue-Based Financing
- Strategic Partnerships
How to raise 100k?
Raising a specific amount like $100k requires a clear strategy and understanding of the most effective fundraising options:
- Angel Investors: If you’re looking to raise around $100k, angel investors are a great option. You’ll need a strong business plan and traction, and be prepared to offer equity in return.
- Venture Capital: If your startup has the potential for significant growth and scalability, venture capital firms might be interested in investing $100k or more, typically at the Seed Stage.
- Crowdfunding: For a product with widespread appeal, crowdfunding campaigns can help you raise $100k from multiple backers, especially if you have a compelling story and an innovative product.
- Bank Loans: If you have a solid business plan and financial history, approaching a bank for a loan could be a viable option to raise $100k, especially if you don’t want to give up equity.
Each of these methods has its pros and cons, so it’s essential to evaluate your business needs and choose the option that aligns with your goals.
Nipun Jain is a seasoned startup leader with 13+ years of experience across zero-to-one journeys, leading enterprise sales, partnerships, and strategy at high-growth startups. He currently heads Razorpay Rize, where he's building India's most loved startup enablement program and launched Rize Incorporation to simplify company registration for founders.
Previously, he founded Natty Niños and scaled it before exiting in 2021, then led enterprise growth at Pickrr Technologies, contributing to its $200M acquisition by Shiprocket. A builder at heart, Nipun loves numbers, stories and simplifying complex processes.
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