STARTUP FUNDING
Group No. 3
STARTUP FUNDING
Bootstrapping Angel Investors Crowdfunding
Government Grants
& Subsidies
Startup Funding
Startup funding refers to the process of
raising capital to start, grow, and scale a new
business. It is essential for product
development, market-entry, hiring talent, and
scaling operations.
Why is Startup Funding Important?
Provides the financial resources needed to
turn ideas into reality
Enables startups to innovate, compete, and
capture market share
Helps businesses survive the initial stages
of high costs and low revenue
BOOTSTRAPPING
What is Bootstrapping?
Definition: Bootstrappi ng i s the process of starti ng and grow i ng a
business usi ng personal savi ng s, revenue, or mi ni mal exte r nal
funding.
Key I dea: Entrepreneurs rel y on thei r own resources and r ei nve st
profits to scal e the busi ness.
Why It Matters:
Empowers fi nanci al i ndependence
Fosters innovati on through constrai nt
Reduces reli ance on external i nvestors
Pros Cons
VISION
Full Control Over the Business Limited Financial
Resources
No Pressure from Investors Higher Financial Risk for
Founders
Ownership of Profits, Equity Slower Growth & Scalability,
Preservation Marketing & Brand Exposure
Stronger Business Foundation Better Skills and Expertise from
Investors
Bootstrappi ng v/s Seeking Investment
VISION
Industry: SaaS (Software as a Industry: SaaS (Software as a Service)
Service)
Initial Investment: Self-funded by Initial Investment: $2 million (seed
Sridhar Vembu funding)
Outcome: Profitable, multi-billion- Total Funding Raised: Over $65 million
dollar global SaaS company before IPO
Outcome: Publicly traded, valued at
over $200 billion
Full Ownership & Control
No Investor Pressure Fast Global Expansion
Sustainable & Profitable Growth High Marketing & Sales Costs
Gradual Expansion Without Covered by Funding
External Influence Strong Brand Awareness & Market
Penetration
Investor-Driven Scaling &
Acquisitions
Angel Investors:
An angel investor is a high-net-
worth individual who provides
financial backing to startups,
usually in the early stages, in
exchange for ownership equity or
convertible debt. They typically
invest in businesses that have high
growth potential but are too risky
for traditional bank loans or
institutional investors.
Types of Angel Investors
Individual Angel Corporate
Angel Investors Networks Angels
Family and
Super Angels
Friends
How Angel Investors Work
Investment Process:
Finding Startups
Screening & Due Diligence
Negotiation
Investment Agreement
Post-Investment Involvement
Exit Strategy
Funding Stages Involved
Very early funding, often from
Pre-Seed Stage friends, family, and angel
investors.
The first official round of funding,
Seed Stage often led by angel investors.
Series A and Later funding rounds typically involve
venture capital firms rather than
Beyond angels.
Pros
Access to No Mentorship Networking &
Early-Stage Repayment and Business Industry
Capital Obligations Expertise Connections
Funding When
(Unlike Loans) Introductions to
Banks Won’t Lend No Debt Burden Industry Potential
Knowledge Customers
Supports Pre-Seed
Operational Easier Entry into
& Seed Stages
Better Cash Flow Guidance Competitive
Flexible Investment Management
Fundraising Support Markets
Amounts
Faster & Higher Risk No Immediate Increased
Flexible Tolerance Pressure for Credibility &
Funding Compared to Exit or Market
Process Banks & VCs Profitability Validation
Cons
Equity Possible Loss Pressure for High
Dilution (Loss of Decision- High Returns Valuation
of Ownership) Making & Exit Expectations
Founders Give Up
Control
Difficult to Set
Equity Some Angels Want Expectation of ROI
Valuation
Influence May Push for an
Reduces Future
Control Potential Clashes Early Exit Lower Valuation
Risk of Unaligned Can Hurt Future
Impacts Future Board Involvement
Goals Rounds
Fundraising
Not All Angel Risk of Risk of
Time-
Founder-
Investors Consuming Investor
Provide Value Investor Process Misalignment
Conflict
Crowd Funding
Crowdfunding is a digital fundraising method where
multiple individuals contribute small amounts to support a
project, business, or cause.
Regulated by SEBI & RBI, depending on the crowdfunding
model
Popular in India, with platforms like Ketto, Milaap, Faircent,
and Wishberry leading the industry.
Real-Time example - Oswald Labs
Founded in 2016, Oswald Labs is an accessibility
technology company that focuses on developing
products for individuals with disabilities.
Crowdfunding Achievement: In June 2017, Oswald Labs
successfully raised ₹100,000 through a crowdfunding
campaign to support their initiatives. source : https://www.sebi.gov.in/cms/sebi_data/attachdocs/1403005615257.pdf
https://www.ketto.org/
Debt Based Crowdfunding
Individuals lend money to borrowers with the
expectation of being repaid with interest over a
specified period. This model offers an
alternative to traditional banking loans.
REAL TIME EXAMPLES :
Rangde Faircent
(Social Impact Lending) (Profit-Driven P2P
Focuses on low-income Lending Platform)
and rural communities. Operates as a Peer-to-Peer
Provides low-interest loans (P2P) lending marketplace
to farmers, small under RBI regulations.
businesses, and students. Lenders earn high-interest
Lenders (social investors) returns from loans given to
do not earn significant individuals or businesses.
returns but support Borrowers are credit-
financial inclusion. checked and rated based
on risk.
Equity-Based Crowdfunding
Equity crowdfunding is a method of raising capital for businesses where a company raises money from
the public for its business in exchange for the public receiving a financial stake (equity) in the company.
1. In India, SEBI does not allow retail equity crowdfunding, only private placements & angel
investing via platforms like AngelList India or Tyke.
2. True equity crowdfunding (public participation) is allowed in the US, UK, and EU, where
both retail and accredited investors can invest in startups.
Why is SEBI against
Equity Crowdfunding?
1. Its biggest concerns are the
possibility of fraud and scams while
soliciting money from a huge public
online
2. Due to crowdfunding platforms’ lack
of adoption of stringent security
measures, the possibility of
cybercrimes occurring increases
3. The risk associated with early-stage
company failure is another worry
that led SEBI to outlaw equity-based
crowdfunding
4. The securities issued through
crowdfunding are illiquid due to the
lack of a secondary market
Government Grants & Subsidies
Types of
Overview Objectives Government
Funding
Financial help from Encourage
Grant-Based Funding
the Indian innovation &
government to entrepreneurship
support startups Loan-Based Funding
Reduce financial
Can be in the form of burden on startups
grants, loans, Equity-Based Funding
investments, tax Support women
benefits, or cost entrepreneurs,
Subsidies & Tax Benefits
reductions MSMEs, and tech
startups
Funding schemes in india
Thank you
very much!
