{"id":1567,"date":"2019-10-01T10:04:15","date_gmt":"2019-10-01T04:34:15","guid":{"rendered":"https:\/\/rzplearn.com\/?p=1567"},"modified":"2025-02-14T16:48:40","modified_gmt":"2025-02-14T11:18:40","slug":"startup-funding-in-india-an-overview","status":"publish","type":"post","link":"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/","title":{"rendered":"Startup Funding In India: An Overview"},"content":{"rendered":"<blockquote><p><span style=\"font-weight: 400;\">Etymologically, funding is the money raised by a startup or provided by an individual, organisation or government bodies to a startup for a particular purpose.<\/span><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Getting started with a business and planning the growth ladder is full of challenges and tough decisions. One of the most critical stages is when you step out to raise funds for your business. Read this article to know everything you should about startup funding, before you reach out to investors or vice versa because there\u2019s not a lot of &#8216;fun&#8217; in &#8216;funding&#8217;!<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e214d7549be\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e214d7549be\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#What-is-funding\" >What is funding?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Stages-of-funding\" >Stages of funding\u00a0<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Pre-seed-funding-or-self-funding\" >Pre-seed funding or self-funding<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Seed-funding\" >Seed funding<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Series-A-funding\" >Series A funding<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Series-B-funding\" >Series B funding<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Series-C-funding\" >Series C funding\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Series-D-funding\" >Series D funding<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Series-E-funding\" >Series E funding<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#How-to-get-funding-for-startup\" >How to get funding for startup?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Create-a-detailed-business-plan\" >Create a detailed business plan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Visit-a-local-bank\" >Visit a local bank\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Seek-help-from-friends-family\" >Seek help from friends &amp; family<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Venture-Capitalists\" >Venture Capitalists<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Angel-Investors\" >Angel Investors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/razorpay.com\/learn\/startup-funding-in-india-an-overview\/#Crowdfunding\" >Crowdfunding<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-funding\"><\/span><span style=\"font-weight: 400;\">What is funding?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Etymologically, funding is the money raised by a startup or provided by an individual, organisation or government bodies to a startup for a particular purpose.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Stages-of-funding\"><\/span><span style=\"font-weight: 400;\">Stages of funding\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">While a founder knows that his or her startup is excellent, it is difficult to convince people to invest millions in your company. Funding for startups is a slow and gradual process, and it is essential to know each stage well in advance.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Pre-seed-funding-or-self-funding\"><\/span><span style=\"font-weight: 400;\">Pre-seed funding or self-funding<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Before even starting the business, the founder(s) must ascertain as to how much amount will they invest from their own pockets. At this stage, people also prefer to take help from family &amp; friends as this does not require lengthy documentation and they can save on heavy interest rates, which the bank would otherwise charge. This is also called the bootstrapping stage of your business.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Seed-funding\"><\/span><span style=\"font-weight: 400;\">Seed funding<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">This is the very first set of money that a startup raises from an external investor. As the name suggests, this is the seed that (hopefully) helps a company grow when it is just planting itself. Usually, the amount raised from the seed funding during the process of startup funding round is used for <a href=\"https:\/\/razorpay.com\/learn\/what-is-market-research\/\">market research<\/a> and product development.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/razorpay.com\/learn\/angel-investor-meaning-definition\/\">Angel investors<\/a> are the most common type of investors at this stage. While this is the starting stage for many startups, it is also a &#8216;wrapping up&#8217; stage, If the startup fails to utilise the first round and get in some results, it gets difficult for them to move to the second round of funding that is, Series A funding.<\/span><\/p>\n<p><span data-sheets-root=\"1\" data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Related Read: What is a Unicorn Startup and How to be One?&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:332543,&quot;3&quot;:{&quot;1&quot;:0},&quot;4&quot;:{&quot;1&quot;:2,&quot;2&quot;:14277081},&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;7&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;9&quot;:0,&quot;10&quot;:1,&quot;12&quot;:0,&quot;15&quot;:&quot;Calibri&quot;,&quot;19&quot;:0,&quot;21&quot;:0}\">Related Read: <a href=\"https:\/\/razorpay.com\/learn\/what-is-a-unicorn-startup\/\">What is a Unicorn Startup and How to be One?<\/a><\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Series-A-funding\"><\/span><span style=\"font-weight: 400;\">Series A funding<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Once a startup passes through the seed stage and has some traction on their website\/app (it can be in terms of users, revenue, views or whatever the set KPI is), they are ready to go for Series A round.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this round, startups are expected to have a plan in place for the future development of the product or service they offer. These businesses are also likely to use the raised money to increase revenue.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Series-B-funding\"><\/span><span style=\"font-weight: 400;\">Series B funding<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Any startup that has reached the Series B has already figured out their product-market fit. All they need is assistance in expanding it.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Usually, the expansion that occurs after raising the Series B round is not limited to focusing on gaining more customers but also in building a strong team to serve the growing customer base.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Series-C-funding\"><\/span><span style=\"font-weight: 400;\">Series C funding\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">At a stage when a startup is ready to acquire other businesses or develop new products or expand to new markets, it can be said that the startup is ready to make it to Series C funding.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The common trend suggests that a startup gets ready to raise Series C round when they plan to go out of their home country or to acquire like business models. (similar to the one they have)<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It is also seen that Series C is the last round that most of the companies go for. However, some companies move ahead to Series D &amp; Series E rounds too.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Series-D-funding\"><\/span><span style=\"font-weight: 400;\">Series D funding<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">This round of startup funding is a little more complicated than the other rounds. As mentioned, most companies usually exit the funding rounds after Series C. However, some companies move to Series D. Two of the common reasons here are:<\/span><\/p>\n<p><b>Positive side-<\/b><span style=\"font-weight: 400;\"> The startup has discovered new opportunity for expansion before going public or has found more opportunities to acquire businesses and increase the value of the business.\u00a0<\/span><\/p>\n<p><b>Negative side-<\/b><span style=\"font-weight: 400;\"> On the other hand, another reason a startup might want to raise Series D can be because they have failed to hit the expectations laid out in the previous rounds.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Series-E-funding\"><\/span><span style=\"font-weight: 400;\">Series E funding<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">A very few companies make it to Series E round for the startup funding. Startups looking to raise funds at this point have usually failed to meet their expectations from the previous funds raised. Another reason can be that they still need some external help before going public.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How-to-get-funding-for-startup\"><\/span><span style=\"font-weight: 400;\">How to get funding for startup?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Now that you know what are the different stages and rounds of funding, here are some of the alternatives about how you can raise funds by yourself, by investors and other ways!<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Create-a-detailed-business-plan\"><\/span><span style=\"font-weight: 400;\">Create a detailed business plan<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Before you begin with anything, have a precise business plan in place. The reasons are simple: no one would like to invest money in your business if you don\u2019t have a detailed and long-term plan in place. Different type of investors will need to see financial projections before they even offer your business a dime. This plan should cover topics like:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Who are you?<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">What do you do?<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">What are your long-term &amp; short-term goals?<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">SWOT analysis<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Competitor analysis\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Defined roles of all the employees<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Detailed financial projections (this is the most important parts)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\"><strong>Pro-tip:<\/strong> Make sure you don\u2019t over-commit and have realistic expectations in place.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Visit-a-local-bank\"><\/span><span style=\"font-weight: 400;\">Visit a local bank\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">It is a better idea to approach a local bank and get into a conversation and check what the loan amount that they can offer to you, the interest rate and other pre-requisites.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Be professional and showcase your requirements.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Get in touch with several lenders and see what works best for you.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Seek-help-from-friends-family\"><\/span><span style=\"font-weight: 400;\">Seek help from friends &amp; family<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">These are a bunch of the most trustworthy people you have. Do not be afraid to ask for help during your startup funding stage from them. The best part is that you will not have to pay any interest in case you raise money from them.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A research report also suggests that loans taken from friends and family contribute to a startup\u2019s success as they have an add-on motivation of faith and support.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Venture-Capitalists\"><\/span><span style=\"font-weight: 400;\">Venture Capitalists<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">These are well-heeled investors that often invest their capital in businesses with indelible growth opportunities. This infused capital is called venture capital.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The bitter side of this kind of fundraising is, you might have to be prepared to give away a portion of your business.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Read <\/span><a href=\"https:\/\/razorpay.com\/learn\/venture-capitalists-funding-startups\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">Beginner\u2019s Guide to Venture Capitalists<\/span><\/a><span style=\"font-weight: 400;\"> to know more.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Angel-Investors\"><\/span><span style=\"font-weight: 400;\">Angel Investors<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Commonly, an angel investor is an individual (or a group of a few people) who provides capital to a startup, usually in exchange for convertible debt or ownership equity.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It is very common for these investors to be an entrepreneur themselves. If you find the right angel investor, you may also benefit from their expert advice and management skills!<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Crowdfunding\"><\/span><span style=\"font-weight: 400;\">Crowdfunding<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">To put it very simply, crowdfunding is a practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, usually via the internet or via gatherings.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are mixed views about whether a company should go for crowdfunding or no, but the final call lies with you!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These are some of the most common ways to fetch in funds for your startup. You can decide what suits your startup the best and plan your roadmap accordingly!<\/span><\/p>\n<p>Recommended Read <em><a href=\"https:\/\/razorpay.com\/learn\/company-permanent-account-number-pan\/\" target=\"_blank\" rel=\"noopener noreferrer\">How to Get a PAN Card for Your Company\u00a0<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Funding is the money raised by a startup or provided by an individual, organisation or government bodies to a startup for a particular purpose.<\/p>\n","protected":false},"author":151156465,"featured_media":1573,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3367,1383],"tags":[3388],"class_list":{"0":"post-1567","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business-glossary","8":"category-business","9":"tag-startup-funding"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/1567","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156465"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=1567"}],"version-history":[{"count":7,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/1567\/revisions"}],"predecessor-version":[{"id":15893,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/1567\/revisions\/15893"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/1573"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=1567"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=1567"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=1567"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}