Types of funding methods

Know some funding options for start ups.

1.VC funding

Venture capital funds are investment funds that manage the money of investors who seek private equity stakes in start-up and small- to medium-sized enterprises with strong growth potential. These investments are generally characterized as high-risk/high-return opportunities. In the past, venture capital investments were only accessible to professional venture capitalists, although now accredited investors have a greater ability to take part in venture capital investments.        1. Angel Funds Angel funds are pools created by high net worth investors or companies to invest in any new venture that they find interesting and profitable to grow in future. They are subset of venture capitalist that focus mainly on start-ups whereas VCs fund in later stage of development. The investment is provided in return for convertible debt or ownership equity. Typical value of investment is $10k to $1mn.  

2.Seed Funds

This is the funding received in the very first round of investment. Seed funding is a formal process than angel funding. It is a scenario involving professional investors and a formal process of funding.  

3.Angel Networks

An angel network is simply a group of angel investors who organise themselves in a formal setting to invest collectively. This help them achieve more operational efficiency and provide mutual support. Most angel networks focus in areas of experience although they are usually open to investments in other areas.

4.Venture Debts

Venture debt applies to debt financing offered to products in early and growth stage venture capital backed companies. It is provided by specialised banks or non-banks to fund working capital or capital expenses. It results in less equity dilution for entrepreneurs and investors and does not require a valuation to be set for the business.  

5.Customer & Client Funding

As the name suggest this type of funding is received from your customers and clients. One of the added benefits of having a client fund and be invested in the start-up is their ability to be a market maker. The investing customers and clients benefit from incentives provided. This funding keeps the customer involved in your start-up and gives you a unbiased feedback.  


An incubator is an entity that helps start-ups to develop by proving services such as mentorship, training or office space. Incubators can be of the type academic institutions; non-profit development corporations; for-profit property development ventures; venture capital firms, and combination of the above.  


Funding through rewards does not involve equity. The investors are reward in return for their investment. A start-up will rely on commitments from current customers, personal support from their social network, or a very strong affinity from Backers who want to see the company succeed.  

8.Corporate Family Offices, Accelerators

Start-up accelerators are fixed-term, cohort-based programs that include seed investment, connections, mentorship, educational components, and culminate in a public pitch event or demo day to accelerate growth.  

9.Government Grants

The government of India has launched 10,000 crore start-up funds. Also, there are schemes launched by individual state governments to encourage small businesses. Government grants are benefitable once you comply to the eligibility criteria. One needs to be aware of the government programs. There are schemes like ‘Pradhan Mantri Micro Units Development and Agency Limited’, ‘Small Industries Development Bank of India’        

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