Do you want to know - How funding works? Read this

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#1

Dear all,
Greetings for the day!!!

Many people asked, Few experts posted and still most of the startup enthusiast are confused. let me give a try. Read this If you want to know - How Funding works?

I have been working for many Startups since long. One of the greatest challenge is funding. Let’s make it simple and will try to understand actually - How it works?

Assume you have started a business and now looking for funding.

First understand - Investment pattern has some rounds like seed, A, B, C - please understand purpose of each round. (*** Note - These explanation of rounds is just to understand the purpose. There are no standard definitions for this.)

Seed - (Sources - Angel Investor, Family, Friends) - For making things happen / reality and getting first few buyers.

Series A - (Sources - Angel Investor, Group of Angels, VC’s, HNI’s, Companies) - Scale up to particular level.

Series B - (Sources - Group of Angels, VC’s, HNI’s, Companies) - Expansion and capturing more market

Series C - (Sources - VC’s, Companies) - Making it more profitable, sustainable or reaching new heights.

Before going ahead, you need to make some plans and reports - Pitch Deck + Business Valuation

Consider your Startup valuation is 8 INR.
1- Seed Stage - (Generally at 10-25%)
Pre valuation - 8 (You own 100% - 8 INR)
Seed Investment - 2 INR
Post valuation - 10 INR (You - 80% - 8 INR, Investor 1 - 20% - 2 INR)

Consider your Startup valuation is 40 INR
2- Series A -
Pre valuation - 40 INR (You - 80% - 32 INR Investor 1 - 20% - 8 INR)
Series A Investment - 20 INR
Post valuation - 60 INR (You - 53% - 32 Investor 1 - 13.66% - 8 INR, Investor 2 - 33.33% - 20 INR)
Consider your Startup valuation is 100 INR
2- Series B -

Pre valuation - 100 INR (You - 53% - 53 INR Investor 1 - 13.66% - 13.66 INR, Investor 2 - 33.33% - 33.33 INR)
Series B Investment - 40 INR
Post valuation - 140 INR (You - 38% - 53 INR Investor 1 - 10% - 13.66 INR, Investor 2 - 24% - 33.33 INR, Investor 3 -28.50% - 40 INR)

Likewise you can calculate.

P.S - This is just information to understand how the funding works. Please consult your mentor, advisory or investor before implementing anything.

Kinds Regards,

Yogesh Thite,

Startup Mentor and Consultant

#StartupwithMeticulous


Tasthana - Fully Flexible Deposits
Startup Funding - Ask Experts - Session 5
Looking for investment and mentor of a already profitable business
We are looking for funding for our online startup
#2

Really you explained very well
Thank you for such informative post


#3

Hi Yogesh, it was indeed a nice briefing.

We are Corporate Law experts and Investment Bankers. Let’s connect, may we help each other by adding value to each other.

It’s Kamlesh Mishra and you can reach me at 7982659624.


#4

@ca.sumitrai Sure. Can you please message me your details.