how to invest in startups in india

How To Invest In Startups In India As An Individual Investor?

When there is talk regarding startups, India confidently stands and keeps its head high till the end of the conversation. According to a recent report, India stood at 3’rd place globally in terms of startups with more than 60,770 DPIIT-perceived new businesses across 636 regions. India is at a good place when it comes to Startups.

The reason why the startup atmosphere is unique in that the entire focus is on growing rapidly. Startups need capital to buy growth. No capital = no growth. 

This blog will give you some ideas on how to invest in startups in India

how to invest in startups in india,  What Is Startup

How To Invest In Startups?

You know that there is a lot of interest in startups, but many people don’t know how to invest in startups in India.

And then the ones who do know how to invest in startups can’t afford to just throw the money around because they don’t know which ones are going to be worth the investment.

A famous quote from a legendary investor Warren Buffet is “Price is what you pay. Value is what you get.”

You need the right ideas, and everything else will fall into line. It doesn’t matter how you reach there or how much you put into it but what it gives you back, how it shapes you and your life. 

Let’s understand this topic one by one

What Is Startup?

What Is Startup, crowdfunding for startups

A startup is a newly emerged business that’s trying to solve a problem or satisfy a need for an existing market. It’s an entity that has just been created, it’s the “new kid on the block” and it’s extremely creative. It has tons of potential and the possibility of becoming a huge success or a huge failure.

It typically has a small number of employees, relatively little capital, and initially operates with a limited scope. A startup company is often funded by external sources such as venture capitalists, angel investors, or seed funding. The term startup company is used to describe a newly emerged, fast-growing business, usually technology-based and often the result of a high-risk, high-reward situation.

They have a very limited budget but are often working with an innovative idea or technology. Much like their name suggests, these startups are in the process of starting something new, and the process of doing so is very exciting.

In simple terms, if we define it can be defined as ‘The unique idea and business run by some brilliant minds that come up with unique products or services in the market.’ 

They can be in any form, keeping in mind the technology and keeping up with the time and its advancement, improvement, organization, or commercialization. 

And in today’s world, even a non-technical individual can start a startup with a solid MVP(Minimal Viable Product) with no-code tools.

And a non-marketing background person can start marketing his/her service or products with the resources on the Internet like Social Media, Advertisements, By creating content around it.

What Is Investment ?

Investing is an idea of distributing the resources, usually the cash or money, to get Income and profit in return; it aims to organize cash by keeping it safe and using it for future purposes.

“Do not save what is left after spending; instead spend what is left after saving.” – Warren Buffet

For example, Some people think that they will purchase the real estate in the present and resell it in the future at higher prices, which will give them double profit and Income. But before buying any real estate, you have to think about the inflation mentioned before. Real Estate investment is only beneficial when it is a rental-based property that produces positive cash flow.

Investing money can be done in startups, stocks, mutual funds, starting a new business, but in the early stage, there is no profit but to create a source of income for the long term.

Before Investing, it is indispensable to research and research to make your work easier and avoid risks.

Why Investments Are Important For Startups?

What Is Investment, how to invest in startups in india,  Why Investments Are Important For Startups

If you want to invest in startups, whether it’s early-stage or later, you need to see how startups fund growth, and how you can get in on the action

Startups are the key to economic growth. They are the engine that propels innovation. They are the high-potential, innovative businesses that can make a difference in society. The core of every startup is its founder and the team. And to make that teamwork efficient towards a common goal, there are many items that need to be taken care of. The startup needs to invest in its future. And that is where the investments come in. 

Investments are the financial resources that are provided to the startup, usually in exchange for equity. Investments can be broken down into several categories. 

Early-age startups are run by founders and their teams. Sometimes they solely develop a product to make it greater for the market. That time they need a more skilled team or players to make it scalable. Product Development, Team Hiring, Working Capital, Legal and Consulting Services, Raw Material and types of equipment, Licences and Certifications

From a founder’s perspective, before you can see any real results from your startup, you will have to invest a lot of time and money into it. You will have to hire employees, create a product, or simply find a way to make the startup known. This can take a lot of money, but if you get lucky and get the right investor, you will find yourself with the money you need. However, no matter how great your product is, you will still have to convince investors to invest in your startup.

It’s not a secret that startups are risky businesses and can blow up at any moment. But if you’re smart and find the right investor, you will be well on your way to success.

They need a good amount of money to run that team, delegate the tasks to work on big strategies, and survive in the market. The investment gives the way they focus on the work that is important for the startup.

i.e. server cost, run marketing campaigns, hire great talent, a dedicated space, and a lot more. Financial security is so important in today’s world, and it is not bad to think about putting your money into something promising.

It will benefit the investors, in the long run, to multiply that amount of money when the startup will make a good amount of profits. 

For example- If a startup continues to grow and expands its earnings then its share price also increases naturally

Warren Buffett makes more capital than Coca-Cola’s CEO. Because Buffett’s Berkshire Hathaway is Coca-Cola’s largest shareholder. 

Investment matters a lot in life also because it offers you the chance to develop your wealth and meet your monetary future goals. 

Investments not only secure your life but also help you to get at heights and pass it on to your future generation. Which, in many ways, is a golden asset you pass.

How To Invest In Startups In India?

In today’s age, many things are done by computer and large amounts of information are available because of the internet and digitalization.  There are various ways an individual or group can invest in startups. 

Investing Sources To Invest In Startups

  • Bank Loans- If you are qualified enough for the process, this can be the best call. The banks come up with friendly methods to help you out.  It offers various funding choices according to your needs, too fast.  
  • Angel Investing – They give monetary support to small startups or business visionaries. Angel investors give more good terms than different banks. They put resources into the individual rather than the suitability of the business. 

Before knowing about how to invest in startups first understand types of investment.

What are the 3 types of funding?

In India, there are major 3 types of investing in startups. 

  • Equity Financing- It involves selling a part or stack in a startup. In exchange, he/she owns 1-10 % of the business. For a Startup they  need to give up a part  of their ownership to shareholders. Ex- Friends,  Angel Investor,  Crowd Funding Incubators and Venture Capitalists, .
  • Debt Financing- It involves borrowing a loan or money and paying it back with interest.  Ex- Bank Loans
  • Grants- It involves capital giving by an entity to a company to facilitate a goal or incentivize performance. Ex- Central Government or State Governments

And then there are  4 ways for an investor to invest in startups. 

1. Seed Funding For Startups In India

This is a type of investing by your personal savings, family invested their money to help a startup. It also includes personal cash, personal loans, I would advise avoiding asking your parents to gamble their life savings on your idea. Personal Saving is one of the most appealing methods. You know what you have and how capable you are to put into it. Everything is under your control in this. 

2. Angel Investment-

An Angel is a single private investor who has excess wealth and finds the opportunity to invest in an early-age startup or business. Who is an individual investor who has net tangible assets of at least two crore rupees with experience of early-stage investment or experience as a serial entrepreneur or professional with at least ten years of experience in his/her domain?

3. Crowdfunding For Startups-

It is a strategy for raising capital through the aggregate exertion of companions, clients, and individual financial backers.

4. Venture Capital-   

VCs are a type of investing in startups and small businesses that have long-term benefits. It is private equity that helps to achieve long-term goals for financial backers, investors, and financial institutions that give capital to new businesses and private ventures. They look toward the startups which have adequate footing and a solid team.  They take money only from high network investors.

How To Find Investors For Startups In India?

How To Find Investors For Startups In India

There are a few startups platforms where you can register yourself to gain ideas and share your ideas which provide angel investing services for startups in India where any investor can start his/her investing journey with the minimum criteria mentioned above. 

Top 10 Startup Investing Platforms in India are- 

  1. LetsVenture
  2. AngelList India
  3. SeedInvest
  4. Angel Investment Network
  5. Tykeinves
  6. Blume.vc
  7. In.startup.network
  8. winvesta.in
  9. mergerdomo.com
  10. Startupindia Gov

If you look around there are some big names that have come up through angel investment and are at top places today like Alibaba, Google, Facebook. 

Is Investing In Startups A Good Idea?

Investing in startups requires a lot of research and a deep understanding of the different qualities and business models of startups.

If you invest, you add some value to your life such as you keep yourself up with everything and staying ahead of time, and you build wealth yourself as Naval Ravikant says that in modern times Financial wealth can give you freedom and more time. It can give you peace.  They help you secure your life, and it allows you to save on taxes.

Hopefully, you won’t have doubts about finding how to  Invest In startups in India as you can easily get through them by the above methods. In other ways, too, there can be resources at a personal level or professional level.

Here are the key things to keep in mind before investing in startups-

  • If you want to start investing in startups, the first step is to stay away from the hype.
  • Be aware while investing anywhere. Keeping in mind the prospect is so important. See the product, understand it from the beginning, and know its history.  
  • Understand its value and growth.How it will exist in some days or years from now. 
  • Understand the perspective of people regarding it. What people think about it is important. 

In the book “22 immutable laws of marketing” the authors mentioned the 4th law – the ‘law of perception’.  “Marketing is not a battle of products, it’s a battle of perceptions”. The only thing that exists in the world of marketing are perceptions in the mind of the customers. 

  • Know who the competitors are and know if ideas stand anywhere near them. 
  • Know about the owner ( how capable they are to handle and carry it once it reaches the peak). Planning things and talking about them ahead is so important. You need to know if that person holds power to act with determination. 
  • Before investing in a startup, keep in mind- understand the business. Go for it if you’re confident about it. 

Some Of The Best Startups In India

If you want to invest, you need to understand where and how you want to go for it. It would be best if you had the plannings, the procedures to follow, and things to keep in mind. Knowing where you are investing is important.

Some of the top startups in India you can look into are- 

  • Oyo Hotels
  • Wakefit
  • Digit Insurance
  • PharmEasy
  • DREAM 11
  • Udaan.
  • Groww
  • Dukaan App
  • Lenskart
  • Aye Finance
  • Razorpay 
  • Messho

Related Post – Top 10 Logistics Startups In India Which Are Improving Online Businesses

Not only these but there are many more startups that can prove to be profitable if you understand them truly. 

In conclusion –

In the last few years, the startup space in India has seen a lot of activity. With more and more startups coming up, it has become imperative to learn about the different ways in which you can invest in startups. Investing in startups can be a great way to get involved with the success of a business! What you give will get back to you in some form. Investment helps achieve certain goals and reach the milestones set up for something.  That’s a simple and important process that can make a huge difference in people’s lives.

We hope that you have found this article useful in learning more about how you can invest in startups in India. The process is different for everyone, so it’s important to understand that you are in control of your own investment decisions. We’re always happy to hear from readers and to answer any questions you may have, so please feel free to contact us anytime.

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