Notesale: Turn your study into money

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LETS’S GO FOR START-UP, NO
WORRY ABOUT FUNDS ITS EASY;
A research firm focused on venture capital and private equity deals in
India, says there are 43 angel networks, 111 venture capital investors
and 37 incubators in the country
...
The trouble with
bootstrapping is that it usually means scrimping on capital, which, in
turn, curtails the start-up's flexibility and ability to grow
...

A less risky way to raise seed capital is to pool resources with a group
of people who have shared interests and work together to escalate a
business idea to at least a prototype
...
This
comes in various forms, each typically catering to different stages of a
start-up, such as the seed stage, early stage and growth stage
...


ANGEL INVESTORS
These are high net worth individuals , who invest in a start-up in return for a
minority share in the business
...
They can also be a group of individuals who pool in
funds to invest
...
Angels typically come into the picture at a start-up's
seed stage, when the business idea is just a concept
...
So what draws an angel's attention? Business ideas that have the
potential to generate solid returns, as well as the person behind it, but they are
basically in it for altruistic reasons
...
One of the Angel investor
did that they invest in start-ups that are unlikely to draw the interest of venture
capitalists since the size of investment is rather small, from 75 lakh to 7
...
Only in special

circumstances will the deal size stretch to 15 crore, In return, they take a 20-30
% stake in your firm
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They review the progress regularly and are even willing
to go back to the drawing board, if required
...
You can also expect quick access to funds
...
Currently, angels are
interested in funding both professional and academic education, mobile valueadded services and apps, innovations in healthcare, search engines and rural
entrepreneurship, E commerce, IT enhanced services and the innovations which
change the way people already lived
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They typically invest at
an early stage of a start-up ; unlike angels, precious few are willing to back an
idea at the concept stage
...
Venture capital firms have been known to help start-ups
organise the next round of funding as well
...
This give an immense pleasure to
IT entrepreneurs
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A typical player is willing to put $2-8 million ( 10-40 crore) in return for a 1040 % stake in the start-up , say industry insiders
...

If you are planning to approach a venture capital firm, be prepared to answer
questions on the kind of bond you share with your business partner or the
rapport with your team
...
Seeing their investment going down because
of a silly feud between the core team members in a start-up is the last thing they
want
...
Unless an entrepreneur is very experienced,
he won't be able to deal with the challenges posed by a start-up single-handedly
...
The basic purpose of any venture
capital investor is to sell his stake for a profit after 4-5 years
...

This is practically the only option that gives entrepreneurs access to deep
pockets at a time when they are trying to build the company
...
You also get expert
help and access to the firm's entire network
...
Also, a
typical player expects an internal rate of return of 25% on the investment in 4-5
years
...
A business with low scalability may not be able to provide
them with the desired returns on their investment and, hence, will be rejected
outright
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It is a highly dilutive way of raising capital
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Also, be
prepared to wait for 3-6 months to close a deal
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VENTURE DEBT
This is a medium-term loan that is exclusively provided to companies backed by
venture capital firms
...
Instead, venture debt providers evaluate applicants on the basis of a
startup's fundamental enterprise value , assessing how it will grow and, thereby,
pegging its future cash flow and ability to repay the loan
...
An experienced founding team, a credible business plan
and a solid venture capital investor base are some factors that venture debtors
would consider in their assessment the interest rates are fixed for the tenure of
the loan and are competitive compared with rates that SME clients can usually
obtain from banks
...
Hence, it understands that a venture is prone to
volatility early in life and, consequently , provides more flexibility to
entrepreneurs
...
These funds come with the least amount of
restrictions and can be utilised for any business initiative, from basic operations
and working capital to supporting capital expenditures and making acquisitions
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The kicker enables them to get a share in the upside if the company does
well
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LOANS FROM NBFCs AND BANKS
This is a standard option for entrepreneurs but not for seed-stage start-ups
...
Usually banks and
finance companies fund up to 80-90 % of the loan-to-value ratio (borrowed
amount divided by the asset value you are purchasing or refinancing),
depending on the credit history of the borrower and the collateral security you
put up, be it property, machinery or marketable securities
...
Banks now give importance to cash flow rather than the primary
security or additional collateral
...
The scheme lends up to 1 crore to small enterprises for
working capital and capital expenditure without collateral
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These are available at interest rates of 1620 %, while loans against property cost 12-18 %
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Besides, if a start-up maintains a healthy credit track record while servicing the
loan, access to all other sources becomes easier
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Ultimately, the key to landing smart funding is to never lose
hope
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This is one area where the more the
cooks, the better the broth
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