Previous Year Question

The funding requirements of start-ups may differ according to their stage of development, risk profile and capital requirements. Therefore, several alternative sources of finance, apart from conventional bank finance, can play an important role.

Angel Investors are individual investors who generally invest their own funds in early-stage and high-potential start-ups. Apart from capital, they may also provide mentorship, business experience and industry networks.

Venture Capital is equity-based funding provided through professionally managed investment funds. Venture Capital generally invests in start-ups having the potential for high growth and scalability. Startup India identifies Venture Capital Funds as an important source of funding during the early-traction and growth stages.

Crowdfunding involves raising funds from a large number of people who individually contribute comparatively small amounts, usually through online platforms. Besides financing, it can also help test market interest in a product or business idea.

Therefore, Angel Investors, Venture Capital and Crowdfunding can all meet different funding requirements of start-ups.