Funding For Startups
It is rarely possible for start-ups to raise sufficient capital to kick-start their operations, launch products and break even. Although a ‘one-time investment’ strategy is theoretically possible, it is hard to cite examples of any successful start-up that has gone this route.
Equity financing is one of the best ways to raise funds for a Start-up.
Equity financing is money lent in exchange for ownership in a company. New businesses can use equity financing to finance operations for their start-ups, or when they need to offset existing debt. Equity funding allows the entrepreneur to obtain funds without incurring debt, improving cash flow. This will allow business owners to focus their attention on making their product(s) profitable rather than paying back their debtors.
The amount of equity an investor (angel/VC) holds is a factor of the company's stage of development when the investment occurs, the perceived risk, the amount invested, and the relationship between the entrepreneur and the investor.
How do investors categorize start-ups? What are different stages of equity funding? What are key points of a Term Sheet? What are Angels and VCs and how are they different from each other?