Any Business require funds to establish itself and cross the initial phase of low revenue generation. Fortunately it is the best time for entrepreneurs in India to raise funds and able to expand their business without worrying on Cash Flow.
Predominantly funding could be classified in 2 parts
1- Debt Funding
2- Equity Funding
Debt Funding is a conventional form of funding wherein the company takes fund on certain rate of interest and the amount is refunded every month or quarter (similar to home EMI). The funds taken are either based on some collateral or without collateral. The most organized channel of debt funding are Banks but there are various other institutions who also offers. Normally Debt funding are taken by ventures which are conventional in nature and have some history of taking Loans
Equity Funding is the new vogue and many VC and PE firms are lapping up exciting new business without worrying on repayment of money given (It is almost a free money!!!) and taking certain shares in hope for future valuation.
In our next part, we will mention in detail about how to ready company so that it is eligible for Debt and Equity Funding. Keep glued in for more details
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