Scribd
Upload
62 views4 pages

Fundraising: Characteristics of Investment Equity Financing Debt Financing Grants

Funding refers to financial investments in a company for purposes like product development, hiring, marketing, and office space. While some startups are self-funded, most seek funding from external sources to support growth. Funding is needed for activities like creating prototypes, hiring employees, marketing, and operating costs. The document discusses different types of funding like equity financing, debt financing, and grants, which have different characteristics in terms of repayment requirements, risk levels, and investor involvement.

Uploaded by

SANKET GANDHI
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
62 views4 pages

Fundraising: Characteristics of Investment Equity Financing Debt Financing Grants

Funding refers to financial investments in a company for purposes like product development, hiring, marketing, and office space. While some startups are self-funded, most seek funding from external sources to support growth. Funding is needed for activities like creating prototypes, hiring employees, marketing, and operating costs. The document discusses different types of funding like equity financing, debt financing, and grants, which have different characteristics in terms of repayment requirements, risk levels, and investor involvement.

Uploaded by

SANKET GANDHI
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 4

FUNDRAISING

‘Funding’ refers to the money required to start and run a business. It is a financial investment in
a company for product development, manufacturing, expansion, sales and marketing, office
spaces, and inventory.
Many startups choose to not raise funding from third parties and are funded by their founders
only (to prevent debts and equity dilution). However, most startups do raise funding, especially
as they grow larger and scale their operations. If you are an entrepreneur seeking to understand
why funding is needed, types of funding available, and how to raise funding, then read on to find
answers to these important questions.

Why is funding required ?

A startup might require funding for one, a few, or all of the following purposes. It is important
that you, as an entrepreneur, are clear about why you are raising funds. You should have a
detailed financial and business plan before you approach investors.

- Prototype creation, product development, website/app development


- Team hiring
- Legal and consulting services for your startup
- Raw materials and equipment
- Licenses and certifications
- Working capital
- Marketing and Sales
- Office space and other admin expenses

Characteristics
Equity Financing Debt Financing Grants
of Investment
Invested Funds to be There is no
There is no component of
repaid within a component of
Nature repayment of the invested
stipulated time frame repayment of the
funds.
with interest invested funds

Risk Factor for the


Risk factor for the There is no risk
investor is lower as he
investor is higher as he factor for the startup
Risk generally has
has no guarantee against as no collateral is
collateral against his
his investment involved
investment

More pressure for


No pressure for
Less pressure for startups startups to adhere to
repayment as
to adhere to a repayment repayment timeline
Pressure for grants are a form of
timeline but added and as a result more
Repayment monetary support
pressure from investors to pressure to generate
provided for a
achieve growth targets cash flows to meet
specific purpose
interest repayments

Return to Capital growth for


Interest payments No Return
Investor investors

Equity Fund Investors


Debt Fund have very No direct
Involvement in usually prefer to involve
less involvement in involvement in
Decisions themselves in decision
decision making decision making
making process

Central
Angel Investors, Self- Banks, Non-Banking
Government, State
financing, Family and Financial Institutions,
Governments,
Friends, Venture Government Loan
Sources Corporate
Capitalists, Schemes (CGTMSE,
Challenges, Grant
Crowdfunding, Mudra Loan, Standup
Programs of Private
Incubators/Accelerators India)
Entities

Stages of startups and sourcing of funding


https://youtu.be/677ZtSMr4-4
https://www.startupindia.gov.in/content/sih/en/looking_for_funding.html
https://www.profitbooks.net/funding-options-to-raise-startup-capital-for-your-business/
https://youtu.be/KB442EchOTY

Equity

https://byjus.com/commerce/what-is-equity/
https://www.investopedia.com/terms/e/equity.asp
https://youtu.be/Q1z395u60xU
https://hbr.org/2007/09/the-strategic-secret-of-private-equity

Venture Capital

https://www.investopedia.com/terms/v/venturecapital.asp
How-venture-capital-works
https://economictimes.indiatimes.com/definition/venture-capital
https://youtu.be/a4aUX5u90oA
Crowdfunding

https://www.investopedia.com/terms/c/crowdfunding.asp
https://www.entrepreneur.com/article/228125
https://youtu.be/voF1plqqZJA
https://youtu.be/Vqvomrib6x0
https://www.cloudways.com/blog/crowdfunding-platforms/

You might also like