Making a startup successful requires more than a unique idea and a great business model. To get a startup up and running or to expand an existing startup, you as an entrepreneur need money. Without adequate funds, a startup will fail to live up to its potential. However, arranging funds for your startup often comes at a price. When you start raising funds, you will be asked to provide equity. This will strip you of a large percentage of income once your startup achieves success and gets big.
But you don’t need to worry. Although fundraising for your startup often dilutes equity, there are certain ways to raise funds that do not require you to do so. In this article, provide a list of free startup grants and also talk about some other ways to raise funds for your startup without diluting equity.
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1. Technopreneur Promotion Program (TePP) by PRISM
The Government of India launched the TePP initiative through the Department of Science and Technology for the purpose of supporting new startups with funding and promotion. This initiative aims to help innovators and entrepreneurs to commercialize their ideas.
The TePP provides startup owners with a ticket size that ranges from INR 2 lakhs to INR 1 crore. It offers grants at various stages starting right from conceptualization to application. The main focus of TePP is technology-based innovations.
2. Multiplier Grant Scheme (MGS)
The Multiplier Grant Scheme is an initiative taken by the Department of Electronics and Information Technology. The program aims to support and accelerate the growth of innovative products in the electronics industry and IT sector.
The scheme offers a grant amount of up to INR 2 crores for a duration of 2 years. The primary focus areas of the MGS are IT, analytics, enterprise software, Internet of Things (IoT), Artificial Intelligence (AI), and technology hardware.
3. Unlimited India
Unlimited India is an organization that supports startups that are social enterprises. It helps them in many different ways other than just providing capital. It provides coaching, site visits, networking, and induction workshops and helps with milestone setting. The organization supports early-stage startups which are startups that are not more than 5 years old.
Unlimited India focuses on startups from many areas. These are:
· Agriculture
· Livelihoods
· Sports
· Gender
· Equality
· Environment
· Health & Well-being
· Energy
· Water & Sanitation
· Inclusive development
· Housing
4. Zone Startups
Like Unlimited India, Zone Startups too helps startups in many different ways. It provides startups with funding, mentorship, access to talent and networking. To add to these, Zone Startups also provide a soft landing to the North American market.
You do not need to have a formal business plan to apply to Zone Startups. It provides a grant ranging from INR 50 lakhs to INR 3 crores. Though Zone Startup provides grants to startups from various sectors, it prefers startups related to technology.
5. Amrita TBI
Amrita TBI is a non-profit organization that aids startups to grow into large, successful businesses. It is partly supported by the Government of India and provides funds and mentorship to early-stage startups.
It provides startups with a grant of up to INR 1 crore. It also offers options for angel investors and venture capital firms.
Other Ways for Startup Grants without Diluting Equity
Apart from these grants, there are some other methods too for raising grants or funds for your startup. Similar to the above grants, these methods too, do not compromise your share in the company and provide you with access to capital without having to offer equity in return.
Bootstrapping
Bootstrapping, also known as self-funding, is not only an effective way to start your startup but also an integral part of the entire funding process. Bootstrapping refers to making use of existing resources and capital that an entrepreneur has access to. It also refers to an entrepreneur raising funds from friends and family. Bootstrapping is the beginning stage of every startup. Without proper bootstrapping, a startup will fail to grow.
As in this way of fundraising, the money involved is entirely from the entrepreneurship’s pocket, there are no other stakeholders involved. And as such, there is no dilution in equity. Through effective bootstrapping, an entrepreneur can grow his or her business while also retaining the entire share of his or her company. Thus, bootstrapping is important.
However, for proper bootstrapping, you will need to start arranging money and resources in advance so that you can utilize them at the right time. If you do not have adequate money before starting off your business, you will fail to raise it through bootstrapping once your business is up and running. This may result in you having to take help from investors who would ask for equity.
Crowdfunding
Crowdfunding is a popular way of raising capital for your startup. Crowdfunding is a method in which consumers participate in the funding of a startup. What you, an entrepreneur, need to do is put up a detailed description of your business on a crowdfunding site. The things that you need to explain in the description of your business are as follows:
· The goal of your company
· Your business model or how you plan to generate profit
· Amount of funding that you need
· Reasons for funding
If consumers find that your business description holds the potential for success, they will participate in funding your startup. They will also take a pledge to pre-buy your product or give a donation. Other advantages of crowdfunding are that it also contributes to the marketing of your product and can attract investors or venture capital firms in the future.
Through crowdfunding, you will have the opportunity to showcase your product and talk about why it is great. This will help in the marketing of your product even before it is launched. And if you have a successful crowdfunding campaign by attracting consumers, investors and venture capital firms will be interested in your company with whom you can strike fantastic deals in the future.
However, for a successful crowdfunding campaign, you need to ensure that your business model and startup idea are truly potent. It must hold the efficacy to make consumers believe in it. A few popular crowdfunding sites in India are
· Indiegogo
· RocketHub
· Dreamfunded
· Onevest
· DonorBox
· GoFundMe
By Winning Startup Contests
Startup contests are becoming really popular these days as a method of fundraising. Winning contests will garner a lot of attention and fetch you media attention. Via contests, you will also be able to spread the word about your business.
In such competitions, you need to pitch your business idea or build a product. If your business model or project stands out from the rest, you have the opportunity to excel in these competitions. Some of the popular startup contests in India are:
· NASSCOM’s 10,000 startups
· Microsoft’s BizSparks
· Conquest
· NextBigIdea Contest
· Let’s Ignite
Bank Loans
Banks provide two different types of financing for startups- working capital loans and funding. Working capital loan refers to the loan required to run one complete cycle of revenue-generating operations. To get the loan sanctioned from banks, you will need to provide your business plan, project report and valuation details. Most of the banks in India such as Axis Bank, Bank of Baroda, ICICI Bank and Axis Bank offer different financing options for SMEs to provide free business loans.
Conclusion
A startup requires more than just innovation. To turn your startups into large enterprises, you need to have access to capital. However access to capital often comes with the price of having to provide the funder with an equity share. However, there are certain ways to raise funds for your startup without having to compromise a share of your company. There are also several grants available that provide funds without asking for a share in return.
In this article, we talked about 5 such grants and also some other free fundraising techniques for your startup. I hope this article was successful in helping you with your queries about free grants for your startup.
FAQs
1. What is a grant?
A grant is a fund provided by an entity to an individual or a company in order to achieve a goal or incentivize performance. Grants are usually not paid back in any form and are provided as gifts.
2. Who are angel investors?
Angel investors are individuals who provide financial aid to startups at an early stage when others consider it risky to do so. Angel investors usually ask for equity in exchange for the funding that they provide.
3. What are venture capital firms?
Venture capital firms are organizations that provide funding to small businesses and startups. They often take a minority stake- 50% equity or less.
