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The Indian economy is one of the fastest-growing economies in the world, securing the 5th position and projected to achieve about 6.4% GDP in FY 2026. Setting up your business with unique ideas can build billions in a few years.
If you want to begin your career by owning a profitable business, then you must know the basics, like how to get funding for your business in India, which is an important step while building your business in India. Don’t worry, in this article, we will help you to know some of the best methods of collecting funds for your business in India in 2025.
Best Ways of Collect Funding for Your Business in India
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Collecting funds for your business may be a tough challenge if you are unaware of it. There are various ways of collecting funds for your business, like asking your friends & family, taking a loan from banks, investing your own collected money, and more, but which one will be best for you?
Let’s explore the best ways of securing funding for your business in India in 2025.
Self-Funding for Your Business in India
Spending your own money is one of the safest ways to start a business in India. This means using your savings or starting your business, taking loans or selling some personal assets to ask for investments.
The main advantage is full control – you make all the decisions without the need for approval of anyone. It also shows future investors that you are serious and completely engaged.
However, the negative side is that it can be risky for your finances. In addition, the money you have may not be enough to increase your business rapidly.
Still, many entrepreneurs prefer self-financing in the beginning. This helps test and improve the idea before including other investors.
Benefits: Total control, no loans, no shared ownership.
Resistance: Limited money, personal financial risk.
Government Schemes & Grants
The Government of India offers a wide range of financing schemes and assistance programs, especially to promote entrepreneurship for MSMES, Startups and Rural New Entrants. These schemes provide financial assistance through grants, low-interest loans, low-interest borrowings and security-free credits, making them a valuable money option.
Popular plans include:
Start-Up India: Provides tax service, easy compliance and financing assistance through the Fund of Funds for Startups (FFS).
Currency Loan: For small and medium-sized companies under three categories- infants, youth and Tarun-on 10 million loans.
Stand-up India: SC/ST and women support INR with loans between 1 million INR to 1 crore.
CGTMSE: The Government guarantees security loans to MSMEs with coverage.
These schemes are ideal for companies that receive financial assistance without giving up equity. However, application processes can be long and documentation-intensive.
Pros: Low-cost capital, no equity loss, government support
Cons: Complex application process, longer approval timelines.
Taking a Loan from Banks
Bank loans are one of the most traditional and widely used methods to raise funds for companies in India. They provide structured financial assistance with fixed repayment conditions and interest.
Banks such as SBI, HDFC, ICICI and others provide loan options such as your business size and requirements, instalment loans, work capital loans, MSME loans and more.
These loans are suitable for companies with a solid business plan, financial estimates and repayment capacity.
The main advantage is that you maintain complete ownership of your business – no equity will weaken. However, banks often require security, good credit history and detailed documentation, which can be a barrier to some startups.
Pros: Full ownership, predictable repayment structure.
Cons: Stringent eligibility, collateral, and paperwork required.
Angel Investment
An Angel Investor is a wealthy individual who invests their money in a venture in return for equity. Angel investment in India has grown in large numbers, particularly with the growth of start-up systems in places like Bengaluru, Mumbai and Delhi.
Angels not only provide funds, but industry knowledge, mentorship and a robust network too. They typically invest in the nascent stages of a venture when the risk is high, but the growth potential is great.
Start-ups can maintain a connection with angel investors on platforms like Indian Angel Network (Ian), Lattlet or Angelist India, for instance, with platforms like boot events and incubators.
But when angels invest for equity, you must join the company’s stock and ensure transparency and outcomes to ensure investors’ trust.
Pros: Funding + mentorship + valuable connections.
Cons: Equity dilution, need to share decision-making.
Crowdfunding
Crowdfunding is usually a modern and innovative way of raising money by raising a small contribution from a large number of people through online platforms. It is ideal for startups, creative projects and social companies that want to validate the idea and raise capital at the same time.
There are many types of crowdfunding:
Reward-based (supporters receive products or allowances)
Donation-based (for social or charitable reasons)
Equity-based (investors receive shares in turn)
Loan-based or colleague loans (borrower pays with interest)
In India, several platforms have made crowdfunding popular, especially for social initiatives and creative start-ups such as Keto, Vishnberry, Milap, Fueldream and Impactguru.
This method not only brings money, but also forms a community of early supporters. However, this requires a strong campaign, forcing the story to be told and constantly promoting to stand out.
Pros: No equity loss (in rewards/donation models), market validation, brand exposure.
Cons: Campaigns need strong marketing, success is not guaranteed, and platform fees may apply.
Business Incubators
Business incubators are programs that help to increase early -stage start -ups with important resources, mentroships and infrastructure. These are ideal for entrepreneurs who have a good idea, but require guidance, financing access and strategic support to convert it into a viable business.
Incubators offered:
- Office location and infrastructure
- Advice from industry experts
- Networking options
- Investors and seed access to seed financing
- Training on business development, finance and marketing
In India, top incubators include Iit Madras incubation cell, T-hub (Hyderabad), Ciie of IIM Ahmedabad and NSRCEL I IIM Bangalore. These institutions play an important role in nurturing innovation and making successful startups.
Business incubators are not just about financing – they provide the right ecosystem for learning, axis and scale, making them a powerful launch plate for new obligations.
Pros: Expert guidance, networking, infrastructure support, and early funding.
Cons: Competitive selection process, equity may be required by some incubators.
Venture Capital
Venture Capital is highly potent for the financing of very high-growth capacity and start-ups with scalable business models in India. Venture capitalists are essentially professional investment companies or funds that usually provide capital in exchange for equity, often going through several rounds as the business grows.
VCs bring in strategic guidance along with capital, institutional contacts, market credibility, and operational assistance. Many Indian startups like Flipkart, Ola, and Zomato saw rapid growth through VC money.
The competition lines up to get VC financing. Start-ups must offer a gripping business plan, demonstrate traction, and prove long-term viability. At the same time, founders need to be ready to pare back control and shoot for aggressive growth objectives.
Sex Capital India, Excel, Nexus Venture Partners, etc., form the list of top VC firms operating in India.
Pros: Large capital inflow, strategic support, networking
Cons: Equity dilution, pressure to scale quickly, potential loss of control.
IPO (Initial Public Offering)
When a privately held company enters listing on the exchanges such as BSE or NSE for the first time with public shareholders, this process is known as an Initial Public Offering (IPO). It constitutes an important value milestone and is often exploited by established companies in the procurement of large capital acquisitions for expansion, loan repayment, or strategic purposes.
It converts the private company into a public trading entity, thereby extending visibility, credibility, and financing for the future. This means that promoters unlock value while investors provide an exit route.
In India, IPOs have recently been used by companies like Zomato, Nykaa, and Paytm as a platform to raise massive funds and create strong equity.
Launching a stock exchange listing, however, is an expensive and highly regulated affair, involving SEBI, stock exchanges, trading bankers, auditors, and legal teams. This, in addition to economic disclosure and everyday public disclosures, makes it suitable only for mature and stable companies.
Pros: Access to large capital, increased brand value, and investor trust.
Cons: Expensive and complex process, public scrutiny, and regulatory obligations.
Conclusion
In the present competitive environment, getting the right kind of money is a serious step for developing businesses and helping them to flourish further. India offers a huge variety of funds operating under various capacities that meet the different business requirements and stages of the business, i.e., the traditional ones such as bank loans and state schemes, or more modern ones consisting of angel investors, venture capital, crowdfunding, and stock exchange listing. For a step-up, incubators and seed financing provide initial pressure, whereas, for a batch of growing businesses, the option of going public or private equity may present itself.
The apt business chooses some core funds to coordinate the financial needs within the plan and to choose the most appropriate source of funding backed by a clear vision. Each alternative has its advantages and disadvantages and thus needs to be thoroughly researched with strategic plans.
With the right funding for your business in India, opportunities can be unleashed, making scaling a feasible task and establishing a strong foundation for long-lasting success in the Indian market.
