How did you fund your startup?

In the US it is quite common for a startup to get its 1st round of funding from SBA (small business association) or an overdraft of $100K from the neighbourhood bank. After that if cash flows can support you should be able to get more credit from the bank. Then there are Mezzanine funds which will give you convertible debt. Infact VC funding is considered very rare in the US.

In India most lending is asset based lending and not cash flow based, meaning you have to have some kind of asset such as a house inorder to raise any debt. Or you have to have parents and family that support you. But how does the average guy get started? There are some inspirational stories about how some did it and it would be great if we can hear them!

So how did you fund your startup?

30 Responses to “How did you fund your startup?”

  1. blaze says:

    We registered our company in last july. before that we were working as freelancers. our area of work is in software and electronics(embedded) development.From the beginning itself we were funding from our own pocket. till now we spend around 3 lakhs. Now we registered our company as MSME and is moving through cgsti from SBI with help of an institution named CEED. Is there any significance for this 3 lakh figure in approaching SBI. and also please tell any strategical info about this cgsti.
    Thank you.

  2. suri says:

    you can go to cgtsi,banks will provide up to 50 lakhs,collateral-free credit to the SSI sector

  3. Rita Parikh says:

    All,

    I am looking at approaching one of the Technology Business Incubators for my start-up. Could anyone please help me with anwers to these questions?

    1) What is your experience with TBI’s? What are the pros and cons of approaching a TBI?

    2) Which are some of the most popular TBIs in the country?

    3) What would be the typical pre-requisites for approaching a TBI?

    Rita

  4. hari says:

    We are a new startup , we integrate sofware solutions & security solutions for Banks , we have APAC wide tie-ups with some niche technology providers. I have do do this part-time , and have job in an MNC , but now I need to hire a full time resources – I need some 7 lakhs to pay salary to a sales guy and some 25 L – 30 day credit against a PO , to buy the software.

    Now no bank will give 7 L , which I will payback in 1 year with interest , because I am sure of the orders. All my cashflow go into my current housing EMI’s , so I cant strech out.

    Even a 40 day LC credit is not possible. Private loan sharks want 10% per month for a LC Credit.

    Worse case I will have to sell , my house .

  5. BB,

    Well said, It’s always better to create some value, before you approach VC’s or raise funds from private investors. Value can be in terms of the partnerships we build / traction / alpha product launch / prototype etc.

    So start withe friends / family or schemes like CGTSI or TEPP or even i believe there is nothing wrong in taking up a PL and use this funds effectively to prove your concept and the investors will be more happy to invest in you. Rather than the business plan let your product ( and if possible a few happy customers) speak for you.

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