Different stage of funding in a Start-up

What is Startups?

A startup company is a business project which is typically a newly emerged business that aims to meet a marketplace need by developing a viable business model around a product, service, process or a platform. A startup is usually a company designed to effectively develop and validate a scalable business model.

How to Fund?

At the beginning stage of every company, it requires some investments. Beyond founders’ own contributions, some startups raise additional investment at some or several stages of their growth. There are wide-ranging stages of funding for a startup, stated as follows:

  1. SEED CAPITAL It is initial investment used for market research and product development. It comes from Founder’s personal savings or from his acquaintances.
  2. ANGEL INVESTOR FUNDING Angel Investors provides loans which can be converted into preferred Stock.
  3. VENTURE CAPITAL FINANCING Venture capital (VC) funding is typically used by companies that are already distributing/selling their product or service, even though they may not be profitable yet.
  4. SERIES A : OPTIMIZE After the business has shown some of a track record, Series A funding is useful in optimizing product and user base. Series A rounds raise approximately $2 million to $15 million, but this number has increased on average due to high tech industry valuations, or “unicorns.”
  5. SERIES B : BUILD Series B rounds are all about taking businesses to the next level, past the development stage. Investors’ help startups get there by expanding market reach. There’s already a big pie that’s been cooking up in Seed and Series A rounds. In Series B, venture capitalists have more of a vision around what the pie will look like, and how big of a slice they hope to obtain.
  6. SERIES C : SCALING In Series C rounds, investors inject capital into the meat of successful businesses, in an effort to receive more than double that amount back.
  7. IPO (Initial Public Offerings) Selling Stock in public for the first time, is referred to as Initial Public Offerings.

How to pitch investors?

  1. Publicize your resources and ideas Highlight your USP and resources of your work such as team members, and other key elements. This helps as being an opportunity for investors to invest in your venture.
  2. Competitors A very important part of your pitch is to highlight the competitors of your field & to prove yourself in front of your investors that how you are better than your competitors.
  3. Growth Prospects Investors always look for something special and unique from the ordinary resources, showing your effective and efficient estimated growth prospects helps startups in pitching high investors.
  4. Clear Picture of Work An Entrepreneur shall show a clear picture of the work to be performed and ideas, to attain worthiness of investment.

Business Plan?

An Entrepreneur for his development has to make Data Rooms as the foremost and best moves. The “data room” is the formal term for a private and shared folders that you’ll use to distribute confidential information about your company.

It should contain:

  1. Business Plan Include a PDF of your business plan, expansion plan or strategic plan. This is the expanded version of your pitch deck with full explanations on each facet of your business.
  2. Competitor Analysis Every business has competitors. You’re either competing directly with another business or you’re competing with the status quo. Both types of competitors should be taken seriously and supported by a SWOT analysis, PEST analysis, and, if there’s a competing product out there, a side-by-side comparison of the features and benefits.
  3. Corporate Structure Corporate structures vary from business to business. At a minimum, you’ll have a Certificate of Incorporation and perhaps the Articles of Incorporation.
  4. Financial Information Audited statements will certainly provide more assurance to the investors conducting the due diligence.
  5. Human Resources Employment agreements for key employees and the template for standard hires will be of interest the further you go down the due diligence list.
  6. Insurance Property insurance and content insurance covering the loss of the physical assets in your company always are summarized with a Certificate of Insurance.
  7. Market Research Validating the opportunity through third-party market research is a critical aspect to generating interest with investors.

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