The Seed Fund
At this stage, one has to begin with a bright business idea and understanding of the market for the product one wants to get into. Groundwork done, an entrepreneur has to begin with his own savings and debts from family or friends. Crowdfunding from Kickstarter can be another option. A bank loan with soft interest can be the best choice. One would need around 10Lakh to 30 lakh to start a venture.
Angel Fund
After an intial pilot run of the business, an entrepreneur needs to scale up to keep things running. Here comes the role of what we call an Angel investor. As the name suggests Angel investor not only bet his money on you but assist to survive in the competitive market. Getting Angel Funded is a validation benchmark for your business idea. An Angel Investor might ask up to 30% of the business equity.
There are multiple factors in calculating equity quotient.
Venture Capital
A company needs VC fund when it reaches a stage where It’s earning revenue, but there is a lot of growth that has to follow on. A VC acquires an agreed proportion the equity of a company in return for the funding. This can be even up to 90% depending on business. There are VCs that offers Accelerator Program along with the funding which can give a boost to the entrepreneur. VC are high-risk investors and a good return on their portfolio. This makes getting venture capital fund a tough game.
Private Equity Fund
Private Equity enters the scene when a business is making profits and looking at expansion. Private Equity refers to non-public ownership equity securities that are not listed on public exchanges. In PE the funds can range from Rs.25 Core to Rs.1200 Core. Gold man Sachs & ICICI Ventures are Standard Chartered are some of the PE funders in India.
Initial Public Offer
Initial Public Offer -IPO happens when the promoters of a private company raise money by selling stock to the public for the first time. IPOs are the issue by younger companies seeking capital expansion & can see a promising future. IPOs can be a risky proposition as It is difficult to predict how a company’s stock would perform without historical data or fundamentals. This stage most companies are in the growth phase and make the future value of stocks uncertain. Going public helps business to have greater access to markets & growth. Most business’ Debt Equity Ratio improves after going public. Being a public company has higher recognition than their private peers. Funding resources available are again much higher than those that are available to private concerns. In conclusion, IPO can be a double-edged sword.
Nithin Sai-(Serial Entrepreneur)
Mobile: +91-9656210077