Startups don't need funds? It's a myth

Startups don't need funds? It's a myth

Sunday June 07, 2015,

3 min Read

There are a couple of things we should consider while understanding startups in general. Startups are new to India or to Indian people. There have always been businesses which started with Rs. 10 or with some borrowing. They started, they did well, they grew and grew exponentially.

But that rarely happened overnight. Our current perception about startups is influenced more by the Silicon Valley trends of overnight success, million dollar investments, cool offices and kick-ass CEOs. Some of the companies in India have also been successful in replicating that to an extent and raised a lot of money, fame and size.


Image Credit "ShutterStock"

If you really want to help startups understand their individual needs, establish a give-and-take model and contribute specifically required for the startup. It could be money, space, internet, expertise, processes, paper work, legalities, and hiring etc. Generic organizations have so far failed to effectively help startups.

Though starting a startup without funds look so simple and meaningful, there are 100 other dynamics which are important to grow your venture and that is the priority, NOT to sulk in the scarcity of funds.

Myth 1 # Get initial funds from personal savings, parents, uncles and friends.

Not all people who have personal savings, parents, uncles and friends who can put money for their crazy ideas, especially in India where families are so reluctant about thier sons and daughters having a startup and not taking the conventional route. And yes, they too have great ideas who do not have even Rs 5000 personal savings or even those who are in debt. Shouldn't they realize their ideas?

Myth 2 # The biggest expense should be Internet bill

This totally unrealistic as we think that the internet ideas are the only ones which are called startups. There are amazing, path breaking product ideas which can change lives, they need money to do prototypes, test them, and break them. Simple costs like stationary, tools, travelling – these are extremely valuable for an idea to realize. That is why incubators give seed money to do initial validations.

Myth 3 # Don’t incorporate company till you see your first revenue cheque

Not every company sees the impact or success in the form of revenue. Acceptance of the product by the users is the most important parameter of success of the idea and validation of the business potential. To realize this business potential you definitely need a company formation. Many ideas and startups are of a nature, having a company from day one would actually help them accelerate their growth and increase their chances to be recognized as credible and sincere. Again, conventional Indian market.

Myth 4 # Hire on equity (founding team)

No one can actually make their breads out of equity. At the end of the day, you need to earn something to feed yourself. It could be Rs 5,000-10,000 but we need to understand one thing clearly that who are innovators and creators, they to eat food, drink some beers and go for a movie. Not everyone has their dads to pay their bills.

 (My views are based on observations, conversations, experiences and dealings of three years being in the startup ecosystem in Ahmedabad where most of the entrepreneurs come from middle class families, sacrificing their jobs with hardly any savings or security. Money can solve a lot of problems for these startups).

About the author: Sneh Bhavsar is the Co-founder & CEO of Twitter @snehism 

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)