The most common thing with everyone in the world is “Problem” and people who solve those problems are called ” Entrepreneurs“. The medium of solving people’s problems is called “Start-up“. These start-ups are driven by Entrepreneurs and their dedicated team. This group of people is driven by a belief that they will bring a positive change in people’s lives and they work extremely hard to make it happen. But it is not as easy as it sounds. You need to identify the problem, then you need to find possible solutions and finally, you come up with the best solution from the lot. Now, you would start working on it and spend some amount to pull it off. Eventually, you get to know there would be much more amount required to make it happen and that amount seems Impossible to you to earn.
And here comes something that excites every Entrepreneur, it is called “Funding“. You could get a whopping amount for your start-up. Every aspiring entrepreneur dreams of his Start-up getting funded well. You have to identify the Right Investor according to your industry. If your Start-up is about Fintech, why would you waste your time with Pharma or FMCG investors? 90 per cent of the start-ups are non-fundable. Why would an investor invest in your idea? The idea wouldn’t do all, you have to show how you would execute it, how much they will get as a Return of investment, how you would reach the first 100 to 1 lakh customers. 90 per cent of the start-ups are non-fundable because they are driven like every regular business. Why would an investor invest in your idea? They don’t care about the effect of your idea or the performance of your company. All they want are good returns on their money because they are not the actual investors. They are also backed by people called “Limited partners“. They want nothing but good returns on the money they have invested. Stages of start-up funding are explained in the following way
Bootstrapping
As a starting capital, you take a loan from your friends and family and the money you got as your savings. You invest that money in your idea and this process is called bootstrapping. It has multiple benefits. You wouldn’t have to pay any interest on the money they lend you. They wouldn’t ask for a company share or some sort of documentation. You invest all of this amount on your idea, you make some money out of it and then you ask “Big Players” of the investment world to invest in your idea. Bootstrapping sends a positive message to investors because you have invested your money also and shows your dedication towards the venture.
“Private Limited” is a must
If your company is running on Proprietorship (you are the only one who is representing the company as a Head) or Limited liability partnership (partners who have limited liabilities), then you will not be funded. You have to be at least “a private limited” company to be eligible for funding. The investor ensures that you wouldn’t use the funding money for any personal purpose. When the company is registered as a private limited, it means multiple people are working for the idea that requires funding.
Crowdfunding
Suppose you have an idea related to the fintech industry. You will go to a lot of people and explain your idea to them. Then, you can ask for a little amount of money as “Funding“. Eventually, you will end up with a big amount because you have collected small amounts from numerous people. It’s a great way. The investors have invested small money, so they wouldn’t bother you much. It will be free of cost marketing. Your idea will spread all over the market. There are some organisations such as Kickstarter, Indigogo, Ketto, Wishberry, Fuel a dream. These organisations help Entrepreneurs in crowdfunding.
Seed funding
You have done all the market research. You know the reach of Your product, number of customers in a specific area, problem-solving capability, profitability factor. You brought the idea to reality, started a company, hired people & launched a Minimum viable product, you have sown the seed. You want to go big, that’s why it is called seed funding. You will approach an Angel investor. Angel investor is someone who invests in the start-up idea initially and gets a certain percentage of share in the company. Generally, it occurs between 5-30 lacs in India. It completely depends on your idea.
Incubator/ Accelerator
Incubators are the organisations that provide you facilities that working on your Start-up gets accelerated and in return, you have to give a certain percentage of share of your company. They get involved in every aspect of growth of your company. They help a start-up by providing
• Office space to work in
• Guidance
• Small funding
• Digital Marketing Support
• Tech team support
“Airbnb” is a successful example that was promoted by an organisation named “YCombinator”.
Series A,B,C,D funding
Get a Budget sheet ready for your start-up funding. How much money would be required? How would you optimize the expenditure? You would give the information about team, product, business model and market competition. Never say “I don’t have any competition“. Don’t put unrealistic projections by asking for 1 million dollars when 5 million dollars are required. Tell the story behind your start-up. It is a conventional kind of funding from Venture capital firms. These are the rounds of funding which has been classified in alphabetical categories. Series A is the first round of funding estimated at 1 -3.5 million dollars. Series B is the second round of funding estimated at 5-9 million dollars. Similarly, Series C & D are estimated at 11- 35 and 35-100 million dollars respectively and so on.
IPO
IPO is Initial Public Offering. After big series funding, your company is well known. Now, your company is converted from a private limited company to a public limited company and gets registered on the Stock Exchange. Private limited companies get investment from Private equity and venture capital firms whereas public limited companies get investment as IPO. As people go on to buy the shares of the company, the value of the company goes higher.
And that’s how your idea turns out to be “Brand“. To raise the funding for a start-up, you need to devote yourself completely. You must know your work and the factors related to your work. You must know how to present your idea to someone who could help you a lot. Fortunately, India is full of start-ups. From our mother’s kitchen to outer space, people are working on every kind of start-up. You have to hang in there in the period of hardships.”Go and Grow through the process” is the Ultimate Mantra.
The Top Notch Writer 