How Do Banks Help Nurture the Start Up Environment?

The most common factor that thwarts the dreams of an aspiring entrepreneur is financial investment. Securing sufficient funds for a business has always been a challenge and a time-consuming task too. However, entrepreneurs today have the advantage of choosing from various funding options offered exclusively by banks.

Quite arguably, this could be one of the strongest reasons behind the flourishing start-up scenario in countries like India and Singapore.

Did you know?

India is the youngest start up nation in the world and has invested more than 5 billion USD on start-ups only in 2015.

Angel investors, venture capitals and in some countries, parents are often the first choice to fund start-up ideas. Banks have traditionally been considered a friendlier option for large enterprises and have been dreaded for their huge interest rates and high collateral demands. However, banks today are breaking shackles and moving out of the shell to embrace innovative start-up ideas.

Did you know?

Between 2005 and 2013, the number of start-ups in Singapore doubled from 24,000 to 42,000.

If you are an aspiring entrepreneur and wish to have a bank support your start-up vision, here are some ways to accomplish the same.

Banks and loans

Several countries across Asia are nurturing the start up culture and banks are supporting them through start-up specific loan plans. Bank loans can be availed for all types of businesses and through any stage of the business lifecycle.

Did You Know?

Food Panda, the popular food delivery portal started out in 2012 and after three years into the market, the company received a funding of 100 million dollars to from Goldman Sachs to further expand its business.

The Government in countries like India and Singapore are also adding more fuel to the roaring start up culture through several grants and incentive programs.

Did You Know?

The Indian Prime Minister unveiled the Start up India and Stand up India Policy to promote innovation and entrepreneurship in the country.

Government bodies like SPRING are nurturing start-ups through offering the right financing options as well as access to markets.

Entrepreneurs must learn to pitch in their innovative ideas to secure these loans. The pitch must be inclusive of details pertaining to the business model, expected returns, the strategy that will be followed for returning back the loan and the additional security provided. Some banks also couple their financial offerings with start-up consultation services to attract more prospects. Bank loans are less expensive than venture capitalist funding and the rate of return is also very nominal for banks. Since banks have existed for long, they follow a set framework of funding evaluation and easier to approach and work with than angel investors or VCs.

Did you know?

Singapore-based OCBC Bank introduced the first collateral free start up loans in the year 2015. A loan amount of maximum $100, 00 could be availed through these loans.

Banks and the Fintech start-ups

Banks across the world are nurturing Fintech companies to support their traditional model of business.

In 2015, Singapore’s leading bank DBS announced an investment of 7 million SGD to nurture the country’s start-up ecosystem. The investment will take the form of partnerships, accelerators and start-up programs.

Additionally banks like UBS and Citigroup have set up innovation labs in Singapore to further enhance new initiatives by start-up companies in the country.

Did you know?

Development Bank of Singapore (DBS) has over 280 branches across 18 markets and is one of the most popular banks in Asia.

While initially it appeared that Fintech will completely disrupt the banking industry, time has proved that innovations are not born overnight and the relationship between banks and Fintech’s is not competition but collaboration. Fintech needs the traditional advantages of bank and banks need these smaller players to survive through the digital era and create a niche for themselves amongst the growing competition.

If you have a great Fintech idea that can solve a particular inadequacy in a bank or enhance the latter’s operational efficiency, chances of being absorbed into the bank are much higher.

Leave a Reply

Leave a Reply

 


how can we help you?

Tell us about your requirement and we’ll offer you the best possible solution. Get in touch now.