Startup Funding – A Hypothetical Startup goes from IDEA to IPO

New Era Of Entrepreneurship: For any entrepreneur, capital investment is one of the important catalyst to drive future growth. Fund raising is one of the fundamental business scenarios which support the growth of a startup. Fund raising largely depends on the nature and type of business. Despite the wide array of funding sources, there are three major categories:

• Bootstrapping

• Equity Funding

• Debt Financing

BOOTSTRAPPING:

Sometimes, the best funding option is not to seek funding at all and instead cut corners where you can work on building your company from your personal savings. It often entails using personal savings, promising stock for sweat equity, or borrowing from friends and family. Besides, saving money, bootstrapping helps you focus on execution and building traction without outside interference.

EQUITY FUNDING:

In its most general form, companies that require quite a bit of runaway (the amount of time before they begin generating significant income) look to equity, as they cannot afford making regular debt payments before generating revenue. In addition, having the ability to leverage an investor’s network and experience can be extremely beneficial to the startup.

DEBT FINANCING:

Simply said, debt is capital you have to pay back. Generally, debt is easier to come by in terms of funding your startup, as there are far more lenders in the world than equity investors.

Five Startup Investors Criteria:  There isn’t an investment thesis for every single investor, but in most of the cases following attributes are looked by investor

That being said, there are certain across-the-board factors investors takes into account when evaluating opportunities; the symmetry/ the right fit, Location, Industry & Stage of development and a Competitive Edge. Financial management is the tangible sphere which drives the imminent future of organization.

Shruti Tulsyan, Manager – Transaction Advisory