How to raise capital for a startup in India?

It’s easy to approach angel investors directly but you will need a concrete business plan.

Along with the plan, you will need to work on the numbers like estimated profit margins, ROI, estimated fixed costs to back your application.

Angel investors can be picky and give importance to only the most promising and viable pitch decks.

Once you have the pitch deck ready, you have to find and approach angel investors in your niche.



Though unlimited support and guidance and less paperwork are the positives, angel investors will expect rapid growth and the funding amount will be lower than the other ways to raise capital for small businesses.

You will have to prepare your pitch book that highlights your business plan and purpose, competitive analysis, target market, capital and cash flow requirements, and management structure.

Then list down VCs who invest in your niche and contact them and get ready to present your pitch confidently.

Some VCs accept entries only during a specific period through their website. You have to keep looking out for updates and notices.

You can raise a huge amount of capital and will get assistance in building your team and business.

But if your business doesn’t go as expected, you will lose it. And you won’t be able to get funds in a single installment.

Crowdfunding can be obtained in four ways. 

• Donation - When people donate money for you to start your business without expecting to get paid back.

• Lending - When the donors pay you and expect you to pay it back where both agree to certain terms and conditions.

• Crowdfunding with rewards - Here every donor will receive a small token of thanks or rewards which can be both financial and non-financial.

• Investment model - One of the most prevalent ways to raise capital for small businesses, the investment model gives equity shares to every investor.

Even a very small contribution can work as you receive money from a large group of people.



The risk is too low compared to other ways to raise capital for small businesses.

Also, your business seed fund goals are reached before you launch it fully. But it can take longer to reach the goal amount.

If the campaign doesn’t get reach, you may not succeed in raising capital.

Launched in 2015 under the PMMY scheme, this scheme offers loans to MSME companies through nationalized and commercial banks.

A higher tenure period is its biggest advantage. Depending on the stage of the business, the offered loan amount varies. They have three plans: Shishu, Kishor, and Tarun. 

• The maximum amount offered - Rs. 10 lakhs

• Interest - 7.00% onwards

• Tenure - 7 years

• Required documents - applicant must produce their bank statement for the past six months, ID and address proof, and should come up with a profitable business plan.

• Who is eligible? - Any Indian citizen who runs or wants to run a non-corporate small business segment including manufacturing units, food processors, wholesale and retail shops, processing and importing units, and other micro and cottage businesses. 

The government of India has originated the standup India scheme to empower entrepreneurs from marginalized communities and women who are above 18 years old to start or develop their businesses.

Even non-individual enterprises are eligible for this loan. They offer a minimum amount of 10 lakh to a maximum of 100 lakh to eligible applicants at a repayment rate of 7 years and at a lower interest rate.



Both interest rates and repayment period are highly favorable to the applicant and much better than what regular banks can offer.

Though this is one best way to raise capital for startups, it can take time to get your application approved due to the higher number of applications they receive every year.

Banks have dedicated teams for loan processing and approval. Hence your application will be processed quickly and you will also receive frequent updates.

The application process will be also simple and stress-free. Most of the process happens online which makes it the best way to raise capital for startups in the comfort of your home.



Pledging an asset is mandatory with many banks when you go for a secured loan. You might lose the pledged asset if you don’t repay the loan within the tenure.

• To be eligible for NBFC loans, you must be a part of any self-help group or joint-liability group.

• Your business should have existed for at least a year. Additionally, the applicant should be older than 22 years old.

• The total amount can go up to 2 crores and there is 1 to 2% of the processing fee involved. You can stretch the repayment period to 36 months. 

• The documentation process will be brief. You will be required to submit bank statements, income tax filing and returns documents, and other proof.

The best attribute of NBFC loans are they come with pre-approved loan limits. That is, you can withdraw any required amount within this limit, use it, and pay interest only for the used amount.

To talk about microfinance loans, every state has different dominators who sanction loans to commoners who don’t have bank accounts or cannot access banking facilities.

They have helped many underprivileged and technically cut off people to access options to raise capital for a company and improve their business functional standards at a national stage.

The top microfinancing units in India are Equitas, ESAF, Annapurna, and Ashirvad Microfinance Limited. 



They aren’t strict and stringent with eligibility criteria, and it’s easier to apply and get approved in a hassle-free manner if you tick all boxes of their small business description. At the same time, interest rates can be higher.

The interest rate will be a lot lower than what traditional banks set for business loans.

Also, a business line of credit can be helpful in building and improving your credit score which plays a key role in demonstrating your repayment ability. 

However, if you don’t repay within the grace period, you will be liable to pay a hefty interest or penalty fee.

Investors would want to know your money management capacities and how the current financial management functions.

You will have to make a list of your current expenses, income, profit, loss, and every minute expense.

Also, review your current expenses in order to project the future funding needs and identify how much you will need to run your business.

Though you will only send your pitch and summary to investors, the business plan finds its importance in later stages.

Once they proceed to move with your application, you will have to present your business plan for a detailed review.

Furthermore, banks require a well-written business plan to identify your business’s financial commitments and scope for revenue. 

There are documents that you will have to present while raising capital for your business.

Collect bank statements, profit, loss, and turnover statements, and company accounting data.

Provisioning documents at the right time will expedite the funding process.

Now is the time for creating your business pitch deck.

Make a presentation that includes the highlights of your business that will make the investors excited to know further about it.

There are templates available online that you can use to quickly prepare your pitch.

Once you are done preparing your pitch, prepare your presentation speech that includes the points not discussed in the pitch deck.

Depending on the stage of your business, your location, the industry that your fall under, and financial requirements, choose an ideal funding method from the options to raise capital for a company.