In recent years India has been a booming hot-spot for startups. And India has been the home ground of many million-dollar start-ups like Paytm Oyo etc.
But according to a recent study, over 94% of new startups fail during the first year of operation itself. Failure to develop proper funding channels can be attributed to one of the common reasons for the failure of these new ventures.

No matter how great your idea is, but if you miss out on funding it, Then you are screwed. So funding can be a crucial aspect for the success of your startup. So let’s take a look at how you can fund your startup to turn it into a million-dollar company of the future.
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1. Govt Programs That Offer Startup Capital:
The Government of India has launched 10,000 Crore Startup Fund in the Union budget 2014-15 to improve the startup ecosystem in India. In order to boost innovative product companies, the Government has launched the ‘Bank Of Ideas and Innovations’ program.
Government-backed ‘Pradhan Mantri Micro Units Development and Refinance Agency Limited (MUDRA)‘ starts with an initial corpus of Rs. 20,000 crore to extend benefits to around 10 lakhs SMEs.
How can you avail a MUDRA loan?
You are supposed to submit your business plan and once approved, the loan gets sanctioned. You get a MUDRA Card, which is like a credit card, which you can use to purchase raw materials, other expenses, etc.

Shishu, Kishor, and Tarun are three categories of loans available under the MUDRA scheme. The loan is approved as per the guidelines of the schemes, after analyzing the applicant’s credit history and credit rating. The loan repayment period and the interest rate of the loan varies according to the respective bank providing the loan.
What is in for you in the MUDRA scheme?
- Shishu category, ( for small units) collateral-free loans of up to ₹50,000 are given to beneficiaries.
- Kishore category(for slightly bigger units) covers loans above 50,000/- and up to 5 lakh.
- Tarun category(for relatively bigger units) covers loans above ₹ 5 lakh and up to ₹ 10 lakhs.
Who can apply for MUDRA loans?
Anyone who runs a small business enterprise is eligible to apply for a MUDRA loan. Individuals can apply for a MUDRA loan with almost all leading financial institutions in India. Applicants have to fill the MUDRA loan application form and furnish their personal and business details. They also have to ascertain the amount they want to avail.
Documents are needed for MUDRA loan
You need to submit the following documents in order to apply for mudra loans.
- The Pradhan Mantri Mudra Yojana application form – duly filled.
- The Vehicle loan application form – duly filled.
- 2 passport-sized color photos of the borrower.
- Photo identity proof
- Address proof
- Income proof.
- Last 6 month’s bank statement
Download Mudra Loan Application Form
2. Crowdfunding - fuel your startup dreams.
Crowdfunding is one of the newer ways of funding a startup that has been gaining a lot of popularity lately.
What is crowdfunding?
In simple terms, crowdfunding is like taking a loan, pre-order, contribution, or investments from more than one person at the same time through the internet.
How does crowd funding work?
An entrepreneur will put up a detailed description of his business on a crowdfunding platform like Kickstarter or Wishberry.
He will mention the goals of his business, plans for making a profit, how much funding he needs and for what reasons, etc. and then consumers can read about the business and give money if they like the idea. Those giving money will make online pledges with the promise of pre-buying the product or giving a donation. Anyone can contribute money toward helping a business that they really believe in.
Equity crowdfunding
The process of raising capital through equity crowdfunding is similar to an initial public offering in that company that issue shares to the investing public. Equity Crowdfunding is illegal in India and is considered as “unauthorized, unregulated and illegal” by SEBI.
Who should consider crowdfunding?
Even though crowdfunding is an attractive avenue to fuel your startup dreams, it’s a highly competitive environment and it may take time to materialize. So if you are in need of funds to expand your business fast, then crowdfunding is not your Cup of tea.
3. Angel Investment In Your Startup:
Angel investments are an appealing way to back your startup. Angel investors are individuals with surplus cash and a keen interest to invest in upcoming startups. They also work in groups of networks to collectively screen the proposals before investing. They can also offer mentoring or advice alongside
capital.
Angel investors have helped to start up many prominent companies, including Google, Yahoo, and Alibaba. In India, many angel investors such as Ratan Tata, Mukesh Ambani Azim Premji, etc have played a leading role as angel investors in the Indian startup arena.
This alternative form of investing generally occurs in a company’s early stages of growth, with investors expecting an up to 30% equity. They prefer to take more risks in investment for higher returns.



The shortcoming of angel investor funding is that Angel investors invest lesser amounts than venture capitalists. Popular Angel Investors in India include Indian Angel Network, Mumbai Angels, Hyderabad Angels, etc.
4. Get Funding From Business Incubators & Accelerators:
Early-stage businesses can consider Incubator and Accelerator programs as a funding option. Though used interchangeably, there are few fundamental differences between the two terms.
Incubators are like a parent to a child, who nurture the business providing shelter tools, training, and network to a business. Accelerators so more or less the same thing, but an incubator helps/assists/nurtures a business to walk, while accelerator helps to run/take a giant leap.
These programs normally run for 4-8 months and require a time commitment from the business owners. You will also be able to make good connections with mentors, investors, and other fellow startups using this platform.
5. Raise Funds By Winning Contests:
In recent years winning contests has been a way to showcase your skills and bag funds for your million dollar company in the premature stages. In such competitions, you either have to build a product or prepare a business plan.
You need to make your project stand out in order to improve your success in these contests. You can either present your idea in person or pitch it through a business plan. It should be comprehensive enough to convince anyone that your idea is worth investing in. Winning these competitions can also get you some media coverage.
With a view to promoting existing Indian apps as well as the development of new apps, Prime Minister Narendra Modi had announced the innovation challenge in July. With this innovation challenge, many startups like Techgentia from Kerala have been able to fund its projects.

Some of the popular startup’s contests in India are NASSCOM’s 10000 startups, Microsoft BizSparks, Conquest, NextBigIdea Contest, and Lets Ignite.
6. Raise Money Through Bank Loans:
Generally, banks are the first place that entrepreneurs go when thinking about funding. Funding from the bank would involve the usual process of sharing the business plan and the valuation details, along with the project report, based on which the loan is sanctioned.
Almost every bank in India offers SME finance through various programs. For instance, leading Indian banks – Bank Of Baroda, HDFC, ICICI, and Axis banks have more than 7-8 different options to offer collateral-free business loans. You can check out the respective bank sites for more details.
Compared to Mudra loans mentioned above bank loans generally have a simplified process for getting a Bussiness loan.
7. Get Business Loans From Microfinance Providers or NBFCs
What do you do when you can’t qualify for a bank loan? Don’t lose hope, there is still a way out. Microfinance basically provides financial services to those who would not have access to conventional banking services. NBFCs or Non-Banking Financial Companies provide Banking services without meeting the legal requirements/definition of a bank. It is increasingly becoming popular for those whose requirements are limited and credit ratings not favored by the bank.
Read more: You may be interested in the article – Mutual Funds – The ultimate beginner’s guide.
Final Word: There plenty of ways to fuel your startup dreams. Be informed that if you have found a suitable arena to fund your startup, you have surpassed a major hurdle in your startup career.
Happy entrepreneurship…