Startup Funding Approaches

In accordance with the notification G.S.R. 364E dated April 11, 2018, issued by the Department of Industrial Policy and Promotion (DIPP), the term “Startup” pertains to an entity that is legally incorporated or registered within the jurisdiction of India.

  • A company is classified as a startup within the following parameters: a period of up to seven years from the date of its incorporation or registration.
  • However, specific conditions must be adhered to for startup classification, including an annual turnover that does not surpass INR 100 crore in any preceding financial year.
  • Furthermore, the entity should be actively engaged in enhancing processes, innovating products or services, developing novel solutions, or demonstrating a scalable business model with substantial potential for wealth generation and employment creation.
  • For entities operating in the biotechnology sector, startup status ceases after a period of 10 years from the date of registration, or when the turnover for any preceding year exceeds Rs 100 crore.
  • Startups typically require funding to support diverse aspects of their business operations, including business development, product innovation, and working capital requirements. Herein lies the exploration of various avenues for startup funding:

Equity Financing: Equity financing pertains to raising funds through the sale of company shares, thereby allowing investors purchasing said shares to obtain ownership stakes within the company. This category encompasses various forms such as equity shares, share warrants, and similar instruments. Prominent sources of equity financing include:

  1. Angel Investors: Individual investors who provide financial backing and mentorship to startups.
  2. Crowdfunding Platforms: Online platforms where individuals contribute smaller amounts to collectively fund startups.
  3. Venture Capital Funds: Professional investment firms that provide capital to startups in exchange for equity.
  4. Initial Public Offer (IPO): The issuance of shares to the public, facilitating the entry of a startup into the stock market.

Debt Financing: Debt financing involves raising capital by issuing debt instruments or securing loans from financial institutions. These funds are typically utilized for resource procurement, working capital management, and business expansion. Common forms of debt financing include:

  1. Debentures or Bonds: Fixed-term debt securities issued to raise capital.
  2. Bank Loans: Funds acquired from banks with an obligation to repay, often with interest.
  3. Factoring: The sale of accounts receivable to a third party at a discount for immediate cash flow.

Grants: Grants are financial awards extended by government bodies or entities to support a company’s objectives or incentivize performance. Two main categories of grants in the Indian startup context are:

  1. Government Grants: Monetary support provided by government agencies to nurture startup growth.
  2. Corporate Grants: Financial assistance offered by corporations to encourage innovation and collaboration.

Seed Funding: Seed funding refers to early-stage investment, usually at the ideation or inception phase of a startup. These funds are directed toward initiating a business and carry a high level of risk due to the nascent stage of development. Seed funding is often obtained from sources like family, friends, angel investors, venture capital firms, and incubators. It can be secured through equity issuance or debt financing. Government schemes and grants also contribute to seed funding.

Growth Stage Funding: Growth stage funding is sought by startups in their expansion phase, once products or services have been introduced to the market and the business model is poised for growth. Angel investors, venture capital funds, and bank loans are common sources of growth-stage funding, either through equity shares or debt instruments.


The Indian startup ecosystem is experiencing substantial growth, necessitating adequate funding for business establishment and expansion. Understanding the diverse avenues available for fundraising is crucial for startup success. These funding sources empower entrepreneurs to secure financial backing, pave the way for market penetration, and foster an environment conducive to sustained business growth.

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Starting an Indian Startup

Embarking on the journey of establishing a startup business is an exhilarating endeavor that comes with numerous challenges. In India, the startup ecosystem has been witnessing a remarkable surge, and the government has played a pivotal role in nurturing and supporting aspiring entrepreneurs. To promote innovation, boost economic growth, and harness the potential of the youth, the Indian government has introduced various schemes and initiatives aimed at providing both financial and non-financial assistance to startups. In this comprehensive guide, we will walk you through the step-by-step process of setting up a startup business in India while capitalizing on the numerous government schemes available to entrepreneurs.

Step 1: Ideation and Research

The foundation of a successful startup lies in a revolutionary and unique business idea. The first step is to brainstorm and identify a problem that your startup can address effectively. Conduct thorough market research to gain insights into your target audience, competitors, and prevailing industry trends. The key to a sustainable business is identifying gaps in the market and providing innovative solutions that resonate with the needs of consumers.

Step 2: Business Plan Development

With a compelling idea in hand, it’s time to draft a robust business plan. A well-structured plan acts as a roadmap for your startup’s success and is essential for attracting investors and partners. Outline your company’s vision, mission, short-term and long-term objectives, target market, competitive advantage, revenue model, marketing strategy, and expansion plans. Additionally, include financial projections, budgeting, and an operational plan to ensure a comprehensive and actionable roadmap.

Step 3: Choose the Right Business Structure

Selecting the appropriate business structure is a critical decision that impacts your startup’s legal and financial aspects. In India, popular options for startups include Private Limited Companies, Limited Liability Partnerships (LLP), or One Person Companies (OPC). Each structure has its unique advantages and compliance requirements. Therefore, it is imperative to carefully analyze your business goals, financial capacity, and potential for future growth before making a choice.

Step 4: Register Your Startup

To formalize your startup’s existence and operate legally, you must register your business with the Ministry of Corporate Affairs (MCA) and obtain the necessary licenses and permits. The Indian government, in its pursuit to simplify the registration process and promote ease of doing business, has introduced initiatives like Simplified Proforma for Incorporating a Company Electronically (SPICe). Furthermore, the Startup India initiative offers a dedicated portal ( that provides valuable resources and guidance to entrepreneurs. Registering on this platform unlocks various benefits, such as tax exemptions, access to government tenders, and fast-track patent application procedures.

Step 5: Leverage Startup India Scheme

The Startup India Scheme, launched by the government, aims to create a conducive ecosystem for startups by offering a range of incentives and support. By registering your startup on the Startup India portal, you become eligible for an array of benefits, including tax benefits, self-certification compliance, and access to various funding opportunities from government-recognized incubators and funding agencies. Furthermore, the scheme facilitates the protection of intellectual property rights and offers assistance in the commercialization of patents.

Step 6: Intellectual Property Protection

Intellectual property is a valuable asset for startups, as it safeguards innovative ideas and provides a competitive edge in the market. To protect your intellectual property, you can file for patents, trademarks, or copyrights through the relevant authorities. The government of India actively encourages startups to pursue patent protection and offers financial assistance to ease the process.

Step 7: Access Startup Funds and Subsidies

Capital is the lifeblood of any startup, and the Indian government recognizes this fact. To facilitate the growth and sustainability of startups, the government has established several funds and subsidies. Prominent among them is the SIDBI Fund of Funds, which provides financial assistance to startups through venture capital funds. Additionally, the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) ensures easier access to credit from financial institutions. The Atal Innovation Mission (AIM) also offers support to startups through a network of incubators, accelerators, and research organizations. By exploring and applying for these schemes, startups can secure the necessary capital to fuel their growth and innovation.

Step 8: Comply with Regulatory Norms

Adhering to legal and regulatory requirements is crucial to avoid legal issues and ensure the smooth functioning of your startup. Register for tax identification numbers, such as PAN and GST, and ensure timely compliance with tax regulations. Familiarize yourself with labor laws and provide appropriate benefits to your employees. Failure to comply with these norms can lead to penalties and hinder your business’s growth prospects.

Step 9: Avail Incubation and Acceleration Programs

To accelerate the growth of startups and provide a nurturing environment, the Indian government has recognized and supported various incubators and accelerators. Joining one of these programs can provide your startup with valuable mentorship, access to state-of-the-art infrastructure, industry connections, and funding opportunities. Participating in such programs can significantly enhance your startup’s chances of success and scalability.


Setting up a startup business in India while harnessing the potential of government schemes and initiatives can be a transformative journey. The Indian government’s commitment to promoting entrepreneurship and innovation has created a conducive environment for startups to flourish. By following this step-by-step guide, aspiring entrepreneurs can confidently navigate the startup landscape and capitalize on the benefits offered by various government schemes. Remember, entrepreneurship requires persistence, determination, and adaptability. With the right support and a well-executed business plan, your startup can make a significant impact on the Indian business ecosystem, contributing to economic growth and societal development.

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Women Entrepreneurship

Women Entrepreneurship in Startup India

India’s startup ecosystem has witnessed remarkable growth over the past decade, and women entrepreneurs have played a crucial role in shaping this landscape. The rise of women-led startups in India has not only brought innovative ideas and solutions to the market but has also challenged traditional gender roles and empowered women to take charge of their careers. In this blog post, we will delve into the significance of women entrepreneurs in the Indian startup ecosystem, discuss the challenges they face, and explore the initiatives taken to promote and support women-led startups.

The Role of Women Entrepreneurs in the Indian Startup Ecosystem:

Women entrepreneurs in India have made significant contributions to various sectors, including technology, healthcare, e-commerce, and social enterprises. They have brought fresh perspectives, creativity, and innovation to the table, driving economic growth and job creation. Moreover, women-led startups have focused on solving real-world problems and addressing the needs of women, thereby creating a positive impact on society.

Women entrepreneurs have proven that they possess the skills, knowledge, and entrepreneurial acumen to succeed in a highly competitive business environment. Their ability to identify market gaps and develop solutions that resonate with the target audience has been a driving force behind their success. By disrupting traditional industries and introducing new business models, women entrepreneurs have challenged the status quo and transformed various sectors.

Despite societal barriers and stereotypes, women entrepreneurs have demonstrated their leadership skills, resilience, and ability to thrive in competitive environments. They have also become role models, inspiring other women to pursue entrepreneurship and break through the glass ceiling. Their success stories have paved the way for a more inclusive and diverse startup ecosystem in India.

Challenges Faced by Women Entrepreneurs:

While women entrepreneurs have achieved remarkable milestones, they continue to face several challenges in their entrepreneurial journey. These challenges often stem from deep-rooted gender biases and systemic barriers. Some of the key challenges include:

1. Gender Bias and Stereotypes: Deep-rooted gender biases and stereotypes often hinder women entrepreneurs from receiving equal opportunities and recognition. They might face skepticism and be subjected to questioning their capabilities, impacting their confidence and access to resources. Overcoming these biases and changing societal perceptions are crucial for creating an enabling environment for women-led startups.

2. Limited Access to Funding: Access to capital is crucial for any startup, and women entrepreneurs often face challenges in securing adequate funding. Investors’ biases, lack of networks, and risk aversion among financial institutions can hinder their access to funds, limiting their growth potential. Bridging the gender gap in funding is essential to ensure that women entrepreneurs have equal opportunities to scale their ventures.

3. Balancing Work and Family: The expectation of managing work-life balance can be particularly demanding for women entrepreneurs, especially those with family responsibilities. Juggling multiple roles can create additional pressure and affect their ability to scale their startups. Supportive policies and infrastructure that enable work-life integration can alleviate this challenge and create a more conducive environment for women entrepreneurs.

4. Networking and Mentorship: Building networks and finding mentors are critical for business growth. However, women entrepreneurs may face difficulties in accessing networks dominated by men or finding mentors who can guide them through the entrepreneurial journey. Establishing mentorship programs, and networking platforms, and fostering an ecosystem of support can empower women entrepreneurs and provide them with the necessary guidance and connections.

Initiatives Promoting Women-Led Startups:

Recognizing the importance of women’s participation in the startup ecosystem, the Indian government, along with various organizations, has launched several initiatives to support and promote women entrepreneurs. These initiatives aim to address the challenges faced by women entrepreneurs and provide them with the necessary resources and support to thrive. Some notable initiatives include:

1. Startup India: The Government of India’s flagship initiative, Startup India, aims to create a conducive environment for startups, including women-led startups. It provides various benefits such as funding support, tax exemptions, and simplification of regulations. These measures encourage women entrepreneurs to enter the startup space and help them overcome some of the barriers they face.

2. Women Entrepreneurship Platform (WEP): Launched by NITI Aayog, the Women Entrepreneurship Platform (WEP) is a dedicated platform that facilitates networking, mentoring, and capacity-building for women entrepreneurs. It aims to address the challenges faced by women entrepreneurs and promote their inclusion in the startup ecosystem. The WEP provides a space for women entrepreneurs to connect with mentors, access resources, and share knowledge and experiences.

3. Funding Opportunities: Multiple funds and schemes have been established to provide financial support to women entrepreneurs. For example, the Bharat Fund provides capital to women-led startups, while the Stree Shakti Package offers financial assistance to women entrepreneurs in partnership with banks. These initiatives aim to bridge the gender gap in funding and provide women entrepreneurs with the necessary resources to scale their ventures.

4. Incubators and Accelerators: Various incubators and accelerators in India focus on supporting women-led startups. These programs provide mentoring, networking, and access to resources and funding, helping women entrepreneurs overcome challenges and scale their ventures. Incubators and accelerators specifically designed for women entrepreneurs create a supportive ecosystem that fosters their growth and success.


Women entrepreneurs are driving innovation, growth, and social impact in the Indian startup ecosystem. Despite the challenges they face, their resilience and determination continue to inspire and break barriers. The initiatives taken by the government and other organizations are playing a crucial role in empowering women entrepreneurs and fostering a more inclusive startup ecosystem in India.

To ensure sustained progress, it is essential to continue addressing gender biases, providing mentorship opportunities, improving access to funding, and fostering an enabling environment for women-led startups. By supporting and promoting women’s entrepreneurship in India, we can unlock the full potential of women as leaders, job creators, and catalysts for change in the startup landscape. Together, we can build a more inclusive, diverse, and thriving startup ecosystem that harnesses the talent and ideas of women entrepreneurs to drive India’s future growth and development.

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