Venture Capitals, Angels, Incubators, Accelerators: which is best for startups.
How to seed a startup with a fund? There are different ways and different types. Let’s explain the different type and role of investor to choose the best one for your startup.
Startup Funding is the process of identifying and search for financial resources to launch a startup business. For the various stages of growth that your startup would experience, resources would be required to fund the developmental processes like expansion, product development etc.
Investors generally offer money for a startup in exchange for equity stakes in the company. Hence, they claim a portion of ownership in the startup and rights to the profits of the startup. So, when the company generates profit, investors gain profits equivalent to their share in the company. Although they carry the risk if the growth of the business doesn’t go as planned.
The first step is the pre-seed stage. In this step you have different types of economic help. Maybe you have some money saved and you don’t really need of external entities. If so, you’re lucky because now you are saved from debts, and you will continue to own all of your company. This is bootstrapping.
You can also do like Jeff Bezos and ask for Family & Friends money in this early stage. And you can use promotional (free) opportunities as startup events, challenges, or competitions.
We have Series (A, B, C ecc.) as different rounds of investment, and first a pre-seed stage or early stage. Every series is a progressive step of financing (scale up), it has different objectives and needs different grade of maturity of the startup business.
The really first step to search for money is to propose your idea to a company which makes funding his business. Let’s see who they are and the differences.
There’ll be a moment to exit for your startup. You can IPO (Initial Public Offering) you company, you can look to a merger and acquisition and, finally, you could buy back your shares from investors.
So, these are the different ways to find funds and help for the launch of your startup. But first, you need a really disruptive idea, a realistic business plan and a deep analysis of the market. Without these it’s hard to have success and money.
He has been writing of technology & innovation for more than 25 years, spending his time in the spasmodic search & write of useful and inspirational contents for managers and entrepreneurs.
Favorite quote: never believe what you think.
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