Wondering how to raise funding for a startup, especially from abroad? In today's interconnected world, startups have unprecedented opportunities to raise capital from international sources. As traditional barriers to cross-border investment continue to diminish, entrepreneurs are increasingly turning to global markets to secure funding for their ventures. This trend not only diversifies funding sources, but also exposes startups to a broader pool of investors with varying expertise and perspectives.
In this article, we take a look at the best crowdfunding platforms for Indian startups, where you can present your vision and expertise to the global investor base.
How to raise funding for a startup?
Source| How to raise funds for a startup?
Exploring diverse strategies and platforms can significantly enhance a startup's ability to attract international funding; let’s look at some of them:
Venture capital (VC) funding
| Venture capitalists: How to get investors for business?
Venture capital (VC) funding involves investment from specialised firms or funds into startups and early-stage companies with high growth potential in exchange for equity ownership. VC firms typically provide capital, expertise, and networks to help startups scale rapidly.
These investments are often made in industries with high innovation potential, such as technology, biotech, and fintech. VC funding plays a crucial role in fueling entrepreneurship and innovation, driving economic growth and transformation in various sectors globally.
Angel investors
Angel investors are people who provide financial backing to startups and entrepreneurs in exchange for ownership equity or convertible debt. Unlike venture capitalists, who typically invest funds from institutional sources, angel investors are often affluent individuals looking to invest their own money in early-stage companies.
These investors not only inject capital into fledgling ventures but also offer valuable expertise, mentorship, and networking opportunities. Angel investors can play a crucial role in fostering innovation and entrepreneurship by taking calculated risks on promising ideas that may not yet have gained traction in the broader market. Their support can be instrumental in helping startups navigate the challenging early stages of growth and development.
Private equity (PE) investment
Private Equity (PE) Investment involves funds pooled from institutional investors, high-net-worth individuals, and sometimes even pension funds or sovereign wealth funds.
These funds are then deployed to acquire stakes in established companies with the aim of facilitating growth, restructuring, or turnaround. PE investors typically take a hands-on approach, providing managerial expertise and operational guidance to maximise the value of their investments.
The goal is often to enhance the company's performance and ultimately generate significant returns upon exit, which could be through a sale to another company or an initial public offering (IPO).
Crowdfunding
Crowdfunding has emerged as a popular alternative finance mechanism, allowing entrepreneurs to raise capital from a large number of individuals, typically via online platforms. This democratised approach to fundraising enables startups to access capital without traditional financial intermediaries like banks or venture capitalists.
Crowdfunding campaigns may offer various incentives or rewards to backers, ranging from early access to products to equity stakes in the company. This model provides funding, validates market interest, and generates buzz around the venture.
Strategic partnerships
Strategic partnerships involve collaboration between two or more entities to achieve mutual objectives, such as expanding market reach, accessing new technologies, or reducing costs. These partnerships can take various forms, including joint ventures, licensing agreements, distribution partnerships, or research and development collaborations. By leveraging each other's strengths and resources, companies can accelerate growth and mitigate risks while tapping into new markets or enhancing product offerings.
Foreign direct investment (FDI)
Source| FDI: how to raise funding for a startup ?
Foreign Direct Investment (FDI) occurs when a company based in one country invests in business operations or assets located in another country. FDI can take the form of establishing new subsidiaries, acquiring existing companies, or investing in greenfield projects.
It allows companies to expand their global footprint, access new markets, leverage cost advantages, or secure strategic resources. FDI can bring benefits such as job creation, technology transfer, and economic growth to both the investing and host countries. Still, it also entails risks related to political instability, regulatory changes, and currency fluctuations.
Accelerators and incubators
Accelerators and Incubators are programs designed to support early-stage startups by providing resources, mentorship, and networking opportunities to help them grow and succeed. Accelerators typically offer a fixed-term, cohort-based program focused on rapid growth and scaling, often culminating in a demo day where startups pitch to potential investors.
On the other hand, incubators provide more long-term support, focusing on nurturing the development of fledgling ventures from ideation to market launch. Both models play a vital role in fostering innovation and entrepreneurship by providing guidance, access to capital, and a supportive ecosystem for startups to thrive.
How to raise funding for a startup from abroad: best crowdfunding platforms for raising funds for a startup
For Indian startups, several platforms offer opportunities to raise funds and garner support for their ventures from international sources. Let’s look at a few of them:
Kickstarter
Kickstarter is a well-known crowdfunding platform that allows entrepreneurs to showcase their projects and solicit financial backing from a global audience. While Kickstarter primarily caters to creative projects like films, music albums, or innovative gadgets, Indian startups with compelling ideas can still leverage this platform to access capital and engage with backers worldwide.
SeedInvest
SeedInvest is another platform that connects startups with accredited investors interested in early-stage ventures. While SeedInvest is based in the United States, Indian startups can participate in fundraising campaigns on the platform if they meet certain eligibility criteria. By showcasing their business plans and investment opportunities, Indian startups can attract funding from a diverse pool of investors, fueling growth and scaling their operations.
Indiegogo
Indiegogo is a crowdfunding platform similar to Kickstarter, offering Indian startups a platform to raise capital for their projects. Indiegogo supports a wide range of ventures, including technology innovations, social initiatives, and consumer products.
Indian startups can leverage Indiegogo's global reach and marketing tools to raise awareness about their projects and secure financial support from backers worldwide. With flexible funding options and access to a large community of potential investors, Indiegogo presents a valuable opportunity for Indian startups to raise funds and bring their ideas to life.
How does SALT Fintech help startups raise funds?
At SALT, we specialise in assisting startups with their fundraising endeavours. Our innovative solution, 'Table by SALT,' tackles the challenges of securing capital, even from foreign sources.
What sets 'Table by SALT' apart? It streamlines the fundraising process by seamlessly integrating banking, compliance, and documentation into one user-friendly platform. By automating complex procedures such as RBI and ROC filings, our product ensures compliance while saving startups valuable time and resources.
With 'Table by SALT,' startups can focus on their core business activities, confident that their fundraising needs are being efficiently managed. Visit us to learn more about SALT Fintech and how we can support your startup's growth!
FAQs
1. How can I navigate legal and regulatory hurdles when raising funds from abroad?
Navigating legal and regulatory hurdles involves conducting thorough research on the investment landscape in both your home country and the target market. Seek guidance from legal experts who specialise in cross-border transactions to ensure compliance with regulations related to securities laws, foreign investment restrictions, tax implications, and intellectual property protection.
2. What are the advantages of equity crowdfunding websites for startups?
Equity crowdfunding websites offer startups access to a broader pool of investors, including accredited and non-accredited individuals, institutional investors, and venture capital firms. By selling equity stakes in their companies, startups can raise larger amounts of capital while maintaining control over their operations and avoiding the debt burden associated with traditional financing. Equity crowdfunding also provides an opportunity to cultivate a community of loyal investors who are aligned with the company's long-term success.
