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Startup
Guide
 Have
a big idea? Dreaming of ‘Kab Banega Crore pati’?
Driving down the road…and flash! You hit upon an idea that
could change the world. An idea that will put you into the annals
of history as a pioneer…but how and where do you start? I’ll
help you find out.
When
all you need is Money…
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For a small capital that goes a long way
The
stock markets have been working for them and entrepreneurs are
looking at more money in the pipeline. With the kind of money
they need being raised through IPOs and mergers IT start-ups are
riding high on this wave of success. This does not make the ordeal
of raising money for a ‘low-tech’ enterprise any easier.
Ask any entrepreneur with a fairly good sales record and a healthy
balance sheet. The answer you may get can be quite disillusioning-
it is close to impossible to raise money for a new venture or
an even an expansion.
Investors
are looking for bigger returns in the high tech arena, and are
investing in millions. Can smaller low-tech companies get a few
crumbs off the table?
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Banks
Banks prefer lending a helping hand to established firms that
are keen on being more successful. Small entrepreneurs may be
sidelined in the process, especially if they represent a low-tech
concern. If you have an exceptionally good track record you can
give it a try.
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Strategic Alliances
This could be a tie-up with a larger company, and would mean an
increase in business through the alliance. The larger company
would also benefit in a way as it would give them an entry or
even a foothold in the local market.
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Venture Capitalists
They furnish the capital and in return get a stake in the enterprise.
This however is very popular in the IT circles. Many dotcoms have
been surviving as a result of VC funding. However this may not
be very bright for small non-IT enterprises because of the quantum
of money they seek.
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Non-Banking Financial Companies
NBFCs come to the aid of entrepreneurs who fail to get into the
good graces of Banks and other investors. They capitalise on the
assumption the supporting smaller enterprises involves lower risks
and secures higher profits. They stand by entrepreneurs for long
periods providing non-financial assistance in addition to monetary
aid. By and large the interest rates they charge are also considerably
lower than Bank rates- a good example is Sundaram Finance an NBFC
in Tamil Nadu that has helped transporters by providing loans
to purchase trucks and buses.
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Credit Cards
47% of small businesses in the United States use credit cards
to raise capital. This idea hasn’t yet caught on in a big
way in India but there shouldn’t be any reason why it should
not become a popular route to raise capital. The only disadvantage
for small enterprises would be the high interest rates working
against them.
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Friends and Family
Many whopping success stories find their roots in loans and funding
from family and friends, this may not prove to be as difficult
as the rest since you will not be required to prove your credentials
etc. The entrepreneur can choose from these options based on his
track record and growth strategies and game plan he has in mind
for the company.
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