Startup means to start something economically. But this not all, it is important to know about the startup in detail. Let’s do it now.
In this article I am going to cover following topics:
- What exactly is a startup?
- What is a startup fund?
- What is a startup investment?
- What are the different stages of startup funding?
- How do you start a startup?
- What is a startup plan?
- How much money does it take to be an angel investor?
- What is a fair percentage for an investor?
- What do you need to start your own business?
- How do you build a brand?
What exactly is a startup?
The startup is new building company managed by an individual founder or group of founders, which is in developing mode. It is generally small when it starts and initially financed by self and investors.
Actually, the startup as by the name is not just about to start something, it is about to think innovative and start working to discover something new. Inferior planning is also a type of innovative startup.
The startup is known for high failure rate, but the some of the startups which succeed are the companies which become influential and have large operations.
The startup process starts with thinking different, doing well market research and developing a business model around a product, service, process and a platform.
What is a startup fund?
Startup fund also known as startup capital is the amount of money required to start a business or a venture. It includes capital required for:
- Premises i.e. Office space
- Licenses and permits
- Research and development
- Human resource
- Manufacturing and developing
- Other and Miscellaneous expenses
All are the basic fund required by a startup to start.
What is a startup investment?
Startup investment is the investment invested by the investor by putting down capital in exchange for a portion of ownership in the company and has rights to the profit and has control in management.
One of the main non-conventional approaches to support a startup came through Kickstarter. With the presentation of crowdfunding, anybody would now be able to back an undertaking or battle in return for early access, or an item markdown. Crowdfunding allows anybody to subsidize a fruitful startup, yet doesn’t give much come back to the financial specialist. It opened the way to the “regular person” financial specialist who could deal with different thoughts and figure out which was meriting a little individual venture.
What are the different stages of startup funding?
Startup funding is divided into 5 major stages. I am going to let you know about each stage in details. But you must know that these 5 stages are not the only way of funding. Exact stages of funding cannot be determined because we don’t know about the exact sources of funding from the vital list of capital arrangement, but these 5 are the top ones, this means most of the startup uses these funding stages.
1) Seed Capital/ Seed Funding
As known by the word “Seed” it is the basic source of capital for a startup used for market research, analysis and plans layout purpose, arranged from own savings and/or acquisition from parents, guardian and any known person.
2) Angel Investor Funding
Angel investors are the individual or group of individuals outside the friends and family who provide funds for future need. The capital funded by Angel Investor is 2nd stage of funding and generally followed after seed funding i.e. once after layout plan is prepared.
The amount of capital received from Angel Investor as a loan that is convertible to preferred stock. In the event that your startup is fund-raising at this stage, your plan of action canvas ought to be demonstrated.
3) Venture Capital Financing
Venture capital is the capital required to expand the startup to a large area or large numbers of persons or to extend product line and marketing effort.
As it is the 3rd stage of funding, the startup here already started functioning here. It is not essential that startup must be in profit to acquired Venture Capital Financing. Different rounds of financing at this stage may happen, and investors may likewise offer to join the association and give extra mastery.
Different rounds of funding are Series A, Series B, Series C Rounds, etc.
In A series funding Pusher, a real-time developer tools provider raises $8Mn in Series A Funding
A recent example for C series funding is about Revolut – A fintech startup raises $250M in Series C Funding
4) Bridge Loans & Mezzanine Financing
Now, organizations might be looking at the accompanying kinds of changes that require extra finances:
- An IPO (first sale of stock)
- An Acquisition of a Competitor
- A Management Buyout
To do as such, they can take advantage of mezzanine financing or “extension” financing.
Mezzanine financing is frequently utilized 6 to a year prior to an IPO and after that, the IPO’s returns are utilized by the organization to pay back the mezzanine financing speculator.
5) Initial Public Offering (IPO)
As you know IPO means offering shares of the companies in the open market for the general public, it is also same for startups. Here money from the public is invested in the startup in respect to the numbers of shares issued to them. Angel investors also invest here in case they seem startup is getting better day by day and achieving their goals.
After the IPO, investment opportunities for a developing organization can be utilized to draw in top ability and the expanded access to capital can give assets to drive the force of your business forward. When you are on the NASDAQ, simply make sure to quit calling yourself a startup, you are in the major associations now.
So, these are the top 5 stages of Startup funding.
How do you start a startup?
It is the most common question that is commonly searched on Google and asked by the persons. How should I start a startup?
And the answer to this question is “Don’t worry”. Just start doing whatever idea you have, from whatever you have.
Seems to be easy? My answer is a big nooooo.
Here you just get motivated and start doing things which will take you to another level. But, once you start you have to face various difficulties because the startup is not an easy setup that will directly install to your accomplishment of the dream. You have to go through nuts to do so.
You need to be motivated to do so as most of the startups fail and you need to overcome them.
- Just start doing
- Start with what you currently have.
- Develop and follow a systematic routine
- Hit along with motivated persons
- Ask someone for advice and help
- Hire coworkers and contract labor
- Search out cofounder – Work with the person who pushes you to the extreme.
- Spend time and money in market research and study
- The product, services, process and a platform analysis
- Talk to the potential customers.
What is a startup plan?
Startup plan is just like the strategy that players made in any sports, just to win the game and beat all the outcomes. Same in the startup, plan is the layout that is prepared by doing the future planning and aggressive market research.
A Startup Plan is fundamentally the rundown of everything that must happen to get the business up and running from the underlying plan to exploring areas to securing merchants to motivating licenses to stock the racks to opening the ways to showcasing and publicizing to overseeing development without any end in sight.
Endeavoring to dispatch a business without a startup design resembles traveling along an awe-inspiring, mountain street without a guide, driving at high speeds, while wearing a blindfold. Here are some key things you ought to incorporate into your startup design.
How much money does it take to be an angel investor?
To become an angel investor you 1st needed to be an “accredited investor”. Accredited investor are the investors “Under the federal securities laws, a company that offers or sells its securities must register the securities with the SEC or find an exemption from the registration requirements”
An accredited investor with a million dollars or have investible asset can become an angel investor. It is not easy to become an angel investor, you need to follow serious regulations and market flow to do so.
What is a fair percentage for an investor?
The fair percentage is not fixed, it is determined by the current market position, funding round and type of startup it is.
In the event that this is your first subsidizing round and you are in excess of a 1 part establishing group, don’t weaken over 20%, in a perfect world around 10%. Actually, you should work in reverse from that point and choose how much money to rise. I say this since you should have around 70% accessible between organizers, to weaken in additionally financing rounds. The maths work this way: 100%-20% to financial specialists, 10% for ESOP Pool = 70%. On the off chance that you have effectively fund-raised from loved ones or some other financial specialists previously, lessen the 20% as needs are.
What do you need to start your own business?
A great startup starts with an idea and that idea is converted into action. Like any huge objective, in the event that you begin by separating it into littler undertakings, you’ll have the capacity to handle enough of the activities important to begin. Here are seven approaches to separate the procedure and streamline beginning with your own independent company.
- Plan layout
- Initial money
- The legal structure of your business
- Name and registration of business
- Business location and market knowledge
How do you build a brand?
Building a brand is not an easy task. It’s required your hard work, knowledge, skill and the way you think to build a brand. Here are the steps to build a brand.
- Research your target audience and your competitors.
- Decide how you want to be seen
- When building your brand, think of it as a person.
- Pick your focus and personality.
- Choose your business name, logo, and slogan.
- Aim to build long-term relationships with your customers.
- Develop a marketing strategy.
- Always consider your branding when communicating with customers.
- Apply your branding across your business and evolve it as you grow.
- Continuity in organization and customer satisfaction.
Other than this, you need to work hard and must follow standards to create a successful brand.
Soon I am updating some of these questions in details, so follow us to keep yourself updated.
Related: Startups The New Era of Rat Race
If you have any query and suggestions do comment below. Waiting to listen from you.