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Start up: Funding options by Anand Lunia

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This slide deck was prepared by Anand Lunia for the TiE Institute Knowledge Series (TIKS) session in Mumbai , Aug 2010

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Start up: Funding options by Anand Lunia

  1. 1. <ul><li>Office deposit- beg for it to be reduced to 3 or 6 months </li></ul><ul><ul><li>Pay rent in advance, instead of deposit </li></ul></ul><ul><li>Furniture- borrow, or buy second hand </li></ul><ul><li>Hardware, laptops, desktops- lease for 2 or 3 years, convert into a monthly cost </li></ul><ul><li>The idea should be to convert all expenses into monthly expenses </li></ul><ul><li>Don’t look at the interest rate of leases- it may be a bit high, but equity is far more expensive </li></ul><ul><li>Try to not lock in money for deposits and advances </li></ul><ul><li>Software purchase Costs: </li></ul><ul><li>Borrow or hire? </li></ul>Managing Capital Costs
  2. 2. <ul><li>Product Development costs: </li></ul><ul><li>Develop products from home, while moonlighting </li></ul><ul><li>Atleast develop prototypes before starting up </li></ul><ul><li>Time is the biggest cost factor- so don’t underestimate it </li></ul><ul><li>Hire senior resources part time till your sales start </li></ul>Managing Capital Costs
  3. 3. <ul><li>Salaries of employees, self- can they be back-ended or to some extent milestone based? </li></ul><ul><li>Travel and other overheads- lead by example in saving costs here </li></ul><ul><li>Marketing investments- become speaker at seminars rather than paying for them, for example. Write articles for newspapers rather than advertising </li></ul>Running Costs
  4. 4. <ul><li>Accountants, Lawyers, service providers can be lenders or may even take equity </li></ul><ul><li>Landlord taking equity? Or revenue share? </li></ul><ul><li>Employees – especially part time specialists take equity for their services </li></ul>Exchange Equity for Service
  5. 5. <ul><li>Best way to generate survival money </li></ul><ul><li>Gradually build your contact base, client base, knowledge base and reference base </li></ul><ul><li>Training, consulting, coding assignments to survive and even generate surplus capital </li></ul>Consulting Cash-Flows
  6. 6. <ul><li>Will a telecom operator fund your great product idea? </li></ul><ul><li>Will your first customer become your reseller? </li></ul><ul><li>Can a custom project be graduated into a product? </li></ul><ul><li>Can the advance money from a sale fund the execution? </li></ul><ul><li>Will you be willing to give a discount for an advance payment? </li></ul><ul><li>Will friends and family fund a project execution? </li></ul>Cash flows- Partnering Customers

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