In the US it is quite common for a startup to get its 1st round of funding from SBA (small business association) or an overdraft of $100K from the neighbourhood bank. After that if cash flows can support you should be able to get more credit from the bank. Then there are Mezzanine funds which will give you convertible debt. Infact VC funding is considered very rare in the US.
In India most lending is asset based lending and not cash flow based, meaning you have to have some kind of asset such as a house inorder to raise any debt. Or you have to have parents and family that support you. But how does the average guy get started? There are some inspirational stories about how some did it and it would be great if we can hear them!
So how did you fund your startup?
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Anish, that is interesting. Does anyone here have any experience with this? I wonder how it applies to internet startups who don’t have a factory/machinery. Nonetheless let me call the local branch and check with them and post results here.
Really interesting to see the comments. Due to lack of time nowadays i am not able to actively take part in the discussions happening at venturewoods.
I just saw the comment from BB that he is looking forward for raising some loans from a bank, but finding it difficult bcoz of the lack of offering collateral. So i would just like to pass on the information that there is a scheme called “CGTSI” where SSI / startups can get collateral free loans upto 50 lakh from the partner banks ( like SBI , canara , PNB and 30 + other banks). So kindly contact the SMB manager of your nearest bank for more details.
How?
My own money, years of sweat, and an angel that believes in me.
Brief history…
Industry: Transportation/Petroleum
Started conceptualizing – 2003
Incorporation and angel funding – 2005
Current stage: Just about Early Stage
Mine is a model that I would not recommend to everyone (maybe not even to myself if there is a next time). We decided that one person needed to be out to start the business. The other person could join once things were rolling.
My partner shared half his salary with me for the entire duration (including half of his bonus). The reason I was out was because my ‘take-home’ salary was lower.
The business did not start as envisaged. This arrangement planned for a few months extended to almost 17 months. Today the business is doing well. We rarely look back and think of those days – but kudos to this gentleman for his commitment, patience and perseverance.
Our savings were used as seed capital.
good to learn about NirmaLabs. I was aware of them but was unsure of their activity levels.
The other incubator I have heard about is IITBombay. Are there any others out there?
BB please do share via post. Yea, this collateral issue is a downer !