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Startup Funding - Coggle Diagram
Startup Funding
Types of Startup Funding
Angel Investors
Helps with getting the startup off the ground.
Investors typically look for ownership equity or convertible debt.
Typically ranges from $10k to $30k.
Affluent individuals provide initial capital.
Venture Capital (VC)
Firms that provide resources to early-stage companies.
Various stages of VC financing:
Seed funding:
Initial minimal funds, often from angels.
Exit/Bridge:
When the VC firm sells its shares after the company matures.
Expansion (Mezzanine):
Investment for newly profitable companies.
Second round:
When the company is successful but not yet profitable.
Growth (Series A):
Large investments ($1-2M).
Start-up:
Early funds for marketing/development.
Different from bank loans (no repayment required).
In exchange for equity or a share in profits.
Incubators
Programs designed to support the development of startups.
Financial and legal advisory.
Access to loans, angel investors, and VC firms.
Computing resources (servers, net access).
Business, marketing, and networking advice.
Example Incubators: Y Combinator, Techstars.
Investor’s Perspective:
VCs and angels invest in:
Teams that have addressed a problem/need.
Profitable businesses.
Companies with market traction and growth potential.
Good ideas with potential to grow.
Clear legal rights to produce the product.
Other Funding Sources
Grants/Government Funding:
Financial support from government sources.
Bank Loans:
Standard business loans that require repayment.
Friends and Family Funding (FFF):
Borrowing/donating money from friends and family.
Public Equity (IPO):
Selling stock to the public to raise capital.
Crowdfunding:
Asking the public for donations through platforms like Kickstarter.