Once you have a business model that is scalable, then it is time to find funders.Venture funds and angel funders typically help an entrepreneur in providing funds at this stage. This method of funding is very prevalent in western countries, and has come into vogue with the popularity of internet. However today, venture funds are also popular in more established sectors like Manufacturing and agriculture.
Unlike bankers, they do not require any security of land and assets, but they do a thorough review of proposal and promoters before funding. Bankers are useful when you have a good asset base, but these funders are useful when your asset base is not as strong, such as in service companies. And more importantly, these funders also act as Mentors and give you access to their network and knowledge.
Why do they fund small units? They share the risk with you and therefore ask for a equity share in your company. They get their return when your unit becomes large and its market value has increased. Either they sell their equity stake to another investor, or wait for public issue to monetise their investment. Because they ask for equity stake, earlier you ask for funds, higher is the stake they ask. Conversely, later you ask, lower is the stake they will ask.
You will find two types of funders.One is a Fund Manager who has collected the money from the investors, and another are the investor members whom you have to approach directly.
1. Getting funds from Investor members directly
In this model, you have to give your proposal to a committee of one of these member networks. This committee short lists the proposal and then informs the members. Each member then takes an individual call on whether he or she wants to invest. Individual investment is about 50 lakhs, while total investment could be in the range of 2-3 crores. Because the cost of managing an investment is high, they will like to invest at least 2-3 crores. You will find it very difficult to interest them if your money requirement is lower than that. Three large networks of members are
In this model, corpus is created by getting money for high network individuals. Many such funds are available. As each fund is created for funding specific type of companies, such as in agriculture or in internet, it is important to find if the fund you are talking to has the mandate to fund your type of products.
For instance, Nexus Venture Partners funds, funds technology and internet companies, while Matrix Partners India has been funding internet and mobile sectors. Seedfund funds, the oldest fund, provides funds to different type of companies, with as low as 50 Lakh to an entrepreneur.Today, numerous funds are available for funding in education, health sector, and agriculture. So if your unit belongs to one of these sectors, you will have many options to search money. Google for the sector, and you will get a list. After that, talk with someone who has used that fund, and you will get real information.
On the other hand, if you need help, write to me on my gmail id. I shall be able to guide you to the right consultants who work in this field.
Unlike bankers, they do not require any security of land and assets, but they do a thorough review of proposal and promoters before funding. Bankers are useful when you have a good asset base, but these funders are useful when your asset base is not as strong, such as in service companies. And more importantly, these funders also act as Mentors and give you access to their network and knowledge.
Why do they fund small units? They share the risk with you and therefore ask for a equity share in your company. They get their return when your unit becomes large and its market value has increased. Either they sell their equity stake to another investor, or wait for public issue to monetise their investment. Because they ask for equity stake, earlier you ask for funds, higher is the stake they ask. Conversely, later you ask, lower is the stake they will ask.
You will find two types of funders.One is a Fund Manager who has collected the money from the investors, and another are the investor members whom you have to approach directly.
1. Getting funds from Investor members directly
In this model, you have to give your proposal to a committee of one of these member networks. This committee short lists the proposal and then informs the members. Each member then takes an individual call on whether he or she wants to invest. Individual investment is about 50 lakhs, while total investment could be in the range of 2-3 crores. Because the cost of managing an investment is high, they will like to invest at least 2-3 crores. You will find it very difficult to interest them if your money requirement is lower than that. Three large networks of members are
- Indian Angel Network ( about 200 members)
- Mumbai Angels ( about 150 members)
- Harvard Angels , the India Chapater of Harvard Business School Alumni Angels ( 25 members)
In this model, corpus is created by getting money for high network individuals. Many such funds are available. As each fund is created for funding specific type of companies, such as in agriculture or in internet, it is important to find if the fund you are talking to has the mandate to fund your type of products.
For instance, Nexus Venture Partners funds, funds technology and internet companies, while Matrix Partners India has been funding internet and mobile sectors. Seedfund funds, the oldest fund, provides funds to different type of companies, with as low as 50 Lakh to an entrepreneur.Today, numerous funds are available for funding in education, health sector, and agriculture. So if your unit belongs to one of these sectors, you will have many options to search money. Google for the sector, and you will get a list. After that, talk with someone who has used that fund, and you will get real information.
On the other hand, if you need help, write to me on my gmail id. I shall be able to guide you to the right consultants who work in this field.
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