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Which Funding Option Should a Startup Choose?
|
Startup Situation |
Potentially Suitable Funding Option |
|
Pre-revenue, pre-seed |
Grants, incubator support where available, and angel equity |
|
Revenue-stage without VC backing |
Revenue-based financing or bank/NBFC loans with eligible CGSS cover |
|
Post-Series A and VC-backed |
Venture debt to extend runway or finance growth |
|
High receivables or inventory requirements |
Invoice financing or working-capital facilities |
|
Deep-tech or innovative manufacturing |
Equity from eligible AIFs, including those supported by Fund of Funds 2.0, and eligible CGSS-backed debt |
Also Read: Indian Startup Funding Reaches $2.9 Billion in Q3
Founders should assess five factors before selecting a funding instrument: the company's stage, cash-flow predictability, amount of capital required, repayment capacity and willingness to dilute ownership.
Akshat Saxena, Principal at Alteria Capital, has explained the broader role of debt financing for businesses, saying: Around 99% of the primary capital raised by businesses across the world is largely debt. What we are trying to do is give early stage founders access to some of that capital.
