A lot of founders I know want to know how to raise funds for their startups. However, the problem that I’ve seen is that many founders start looking for investors before they’ve even figured out whether their business is actually ready for an investment.

Secondly, funding has become so closely associated with startup success that founders have assumed raising money is the next milestone after launching a product. So immediately after they’ve built a product, they build a pitch deck, attend startup events, reach out to investors and start fundraising.

My question to such founders is, “are you in the business of serving your customers or raising funds?”

I get it. There are some businesses who cannot operate without heavy funding and if you’re seriously looking to start such a capital-intensive business, you would not be here looking for how to raise funds in India.

Let’s understand one thing first, investors don’t fund startups because founders need money. They fund startups because they believe the business can generate significant returns and the best time for you to raise funds is when your business has already shown signs that it works.

What I mean when I say this is:

Investors want evidence that customers want what you’re building. Market validation can include paying customers, pre-orders, pilot projects, signed contracts, strong user growth, or high customer retention.

You don’t necessarily need massive revenue. However, you do need proof that your startup is solving a real problem for a real market. If you’re a founder still validating your idea, you’re better off with focusing on building an MVP before chasing investors.

Investors will want answers to questions like; how do you make money? what are your margins? What is your customer lifetime value? How large is the market opportunity? What makes your solution different?

If you cannot clearly explain how your business generates revenue and scales, fundraising becomes significantly harder.

One of the biggest mistakes founders make is raising money simply because they think startups should raise money. however, investors expect founders to know; how much capital they need? Why they need it? How long will it last? What milestone it will achieve?

For example: they need funding for hiring a time, expanding into new markets, product development, regulatory approvals, production scale-up, marketing and customer acquisition etc. The clearer you are on how you are going to use the funds, the stronger your fundraising story becomes.

Every founder has projects, which is a must as it shows the future. But investors care more about your current traction. Traction can include your monthly recurring revenue [MRR], revenue growth, active users, customer retention, partnerships, distribution channels, repeat purchases etc.

A startup with ₹10 lakhs I revenue and growth consistently are often more attractive thana startup with ambitious projects and zero customers.

I’ve observed that many founders believe investors invest in ideas. Yes, the idea matters and so does a lot of other things but an investor doesn’t decide to invest just on the basis of an idea. They look at:

From what I know after speaking directly to a few investors is that, they are often investing in the founder first. They want to understand how you think, how you solve problems and how you respond when things don’t go according to plan.

Investors know that markets change, products evolve, competitions kicks in and business models often need adjustments. Which is why they also look for some specific qualities in the founder such as persistence, resilience, adaptability, clarity and leadership that re-assures the thoughts they are having in their minds.

Investors want to know whether the opportunity is large enough. So, they’ll evaluate Total Addressable Market [TAM], Serviceable Available Market [SAM], Serviceable Obtainable Market [SOM], Competitiveness, Industry growth trends, etc.

Investors want to understand what problem are you solving? Why does the problem matter? Why is your solution better? what prevents competitors from copying you? Your advantage could be technology, distribution, brand, network, intellectual property, industry expertise, etc.

Investors know that markets change, products evolve, competitions kicks in and business models often need adjustments. Which is why they also look for some specific qualities in the founder such as persistence, resilience, adaptability, clarity and leadership that re-assures the thoughts they are having in their minds.

Investors want to understand what problem are you solving? Why does the problem matter? Why is your solution better? what prevents competitors from copying you? Your advantage could be technology, distribution, brand, network, intellectual property, industry expertise, etc.

Investors don’t expect founder to predict a perfect future. It’s impossible. However, they do expect founders to have a clear roadmap. So, you must have a startup plan with clear milestone and direction which helps you build your startup and also raise funds.

Investor needs clarity on where the company is today, where it wants to go and how it plans to get there.

There are several ways to raise funds depending on which stage is your business in and business model. Here are some ways you can raise funds for your startup in India:

Investors know that markets change, products evolve, competitions kicks in and business models often need adjustments. Which is why they also look for some specific qualities in the founder such as persistence, resilience, adaptability, clarity and leadership that re-assures the thoughts they are having in their minds.

Bootstrapping means funding the business yourself rather than relying on external investors or lenders. In the early stages, this often involves using personal savings, income from freelance work, consulting projects, profits generation by another business or friends and family. Many founders choose this route because it allows them to get started immediately without spending time pitching to investors or giving up equity.

One of the biggest advantages of bootstrapping is that you retain full ownership and control of the business. You can make your own decisions, set your own priorities and grow at a pace that aligns with your vision rather than investor expectations. It also encourages financial discipline, as founders are often forced to focus on generating revenue and building a sustainable business model from the outset.

However, bootstrapping does come with its own challenges such as slower growth which can make it harder to invest aggressively in hiring, marketing, product development or expansion opportunities.

Despite these limitations, many successful businesses have been built entirely through bootstrapping, proving that external funding is not always necessary to create a profitable and sustainable company.

Venture capital firms typically invest in startups with significant growth potential and the ability to scale rapidly. Unlike angel investors, venture capital firms manage pooled funds from multiple investors and generally look for businesses that can generate substantial returns over time.

VC funding is usually suitable when a startup has ready demonstrated product-market fit, growth is accelerating, a large market opportunity exists and additional capital can meaningfully increate growth.

While venture capital can help startups scale much faster than they could through revenue alone, it also comes with expectations. As a result, founders should carefully consider whether VC funding aligns with their long-term vision for the business.

startup accelerators and incubators are programmes designed to help early-stage companies growth gaster by providing resources, guidance and access to networks. These programs are particularly valuable for first-time founders who need support in refining their business model, validating their product or preparing for fundraising.

They often provide seed funding, mentorship, networking opportunities, investor introduction and various forms of business support. Many programs also offer structured workshops, office space, legal guidance and access to experienced entrepreneurs who can help founders avoid common mistakes.

India has introduced several initiatives to support startups and encourage innovation across different sectors. These programs are designed to help founders access funding and resources without relying entirely on private investors.

One notable example is the Startup India Seed Fund Scheme [SISFS], which provides support to eligible startups through recognised incubators. Depending on eligibility criteria and programme requirements, founders may gain access to seed funding, grants, incubation support and mentorship. Others include DST Nidhi – Start-to-scale startup support and MeitY Startup Hub.

Crowdfunding is a great way to raise money. It allows founders to raise money directly from supporters, customers or communities who believe in their product or mission. Instead of relying on a small number of investors, startups can gather contributions from a large number of individuals through online platforms.

This approach can be particularly useful for consumer products, creative projects or community driven businesses where there is a clear audience willing to support the idea. Successful crowdfunding campaigns often combine fundraising with marketing, helping founders build awareness and generate early customer interest.

Crowdfunding is also an excellent form of market validation. If people are willing to financially support a product before it is widely available, it shows that there is a demand and can strength a startups position when pursuing larger investment rounds in the future.

Raising funds for a startup in India is not easy, which is why I always advice founders to focus on validating the demand, building traction, understand your business model and generating enough revenue for the business to sustain.

Because from all the investors, I’ve interacted with and spoken to, one thing I know for sure is that they’re not looking for perfect businesses. They’re looking for a founder who understands the problem, understands the market and can execute effective.