Funding Fundamentals - Knowlarity Communications Pvt. Ltd

It is very important to understand the ins and outs of venture financing to have any chance of succeeding at your first tryst at fund raising. A startup owner must show that she/he has a solid business plan in order to succeed. Basically venture financing is all about the exit plan. Venture Capitalists want to cash out after 5-7 years through an IPO or outright sale.

There are several rounds of financing. The initial corpus or "seed money" is provided by the founders. Normally the founders borrow from their friends or family to start a business. Sometimes Angel funding is available, but not always. Once the business is up and running, the startup owner can make a pitch for Venture Capital Funding.

The amount of funds received depends upon several factors like scalability, barriers to entry, technology available and competitors in the market. There are several stages of funding too: Series A, B, C and D. Outside capital is invested in return of some shares or debentures. There is also something call Bridge or Mezzanine financing just before the IPO hits the market. Finally there is the IPO which is basically the payback time for Venture Capital Fund Owners.

Not many succeed when it comes to raising V.C funds. The ones with a scalable, service oriented model are more successful in making the cut. So build a scalable business, wow your customers with super good services and the good times will roll.

Source : Equity Bulls

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