Question

What is seed and startup financing? What role does crowdfunding play for entrepreneurs?

Answer 1

15:52 15:52 @STulle Seed Capital - Read-only Read Only - You can't save changes to this f... v Seed Capital: Seed capital is a form of securities offering in which an investor invests capital in a startup company in exchange for an equity stake or convertible note stake in the company. The term "seed" suggests that this is a very early investment, meant to support the business until it can generate cash of its own, or until it is ready for further investments. Seed capital can be described as the capital necessary to start a company and can be used to pay for preliminary operations such as market research and product development Investors can be the founders themselves, using savings and loans. They can be family members and friends of the founders. Investors can also be outside angel investors, venture capitalists, accredited investors, equity crowdfunding investors and revenue-based financing lenders. Seed capital can be distinguished from venture capital in that venture capital investments tend to come from institutional investors, involve significantly more money, and involve much greater complexity in the contracts and corporate structure accompanying the investment. Seed funding involves a higher risk than normal venture capital funding since the investor does not see any existing projects to evaluate for funding. Hence, the investments made are usually lower in the tens of thousands to the hundreds of thousands of dollars range) as against normal venture capital Investment in the hundreds of thousands to the millions of dollars range), for similar levels of stake in the company. Seed funding can also be raised online using equity crowdfunding platforms. Sources of Seed Funding for Startups On the path of seed funding, the first step is understanding the different type of investors or potential Investors as there are multiple sources where one can aid from: Business Revenue One of the best ways to raise seed capital is by generating revenue through the startup being built. In recent times, this method has gained prominence as it does not involve the complexity of seeking external funding or diluting stake. And it also proves that there is demand for the product in the market. A variation of this is crowdfunding, where the product is showcased to potential investors through stages of development. With more than 500 crowdfunding platforms currently active in India, this has become one of the most popular avenues of seed funding Personal Savings or Bootstrapping Founders may put in their personal wealth and savings as seed funding. Also known as bootstrapping, this brings extra financial pressure but there is no pressure on founders to return borrowed money. Corporate Seed Funds Usually, mega-corporations and tech giants are looking for a way to invest in new innovation that they may spot in the market. This source of funding brings big visibility for the startup brand and is usually an early indication of an acquisition in the future. Tech giants such as Apple, Google and Intel back startups regularly with seed money, GV is the investment arm of Alphabet (Google's parent company). while Intel Capital is chipmaker Intel's dedicated division for startup investments. Incubators Incubators generally provide small seed investments and offer services such as office space or management training for startups that are at a very early or idea stage. Many incubation programmes do not take equity from the startup but do offer support beyond just funding. Most importantly, incubators hain chana thoides and hain nlilifu the market.fit for startuin m urte and contra

15:52 O lly Read Only - You can't save changes to this f... v do not take equity from the startup but do offer support beyond just funding. Most importantly, incubators help shape the idea and help solidify the market-fit for startup products and services. Accelerators Unlike incubators, accelerators work with startups in scaling up their business rather than backing and nurturing early stage innovation. Accelerators also back startups through small seed investments along with professional services, networking opportunities, mentoring and workspace. International Philanthropic Impact Investors When setting up a business that is dedicated to addressing a social issue, one of the main questions is how to get seed funding for such a startup. This is where startups could approach international philanthropic impact investors, who act as seed investors for startups with social impact. One of the major advantages in this class of investors is that although the foundations are large, the expectations are fewer than Venture capitalists or institutional investors. Micro VCs: Apart from the above listed options, micro VCs or micro venture capital firms, have garnered quite a lot of attention in recent times. These firms are into an investment of institutional money when the startup is in the seed stage itself. Angel Funds Sometimes, investors come together to form angel networks or groups where they each invest small amounts in the idea or the company during the early stage financing round. Crowdfunding: Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture. Crowdfunding makes use of the easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together, with the potential to increase entrepreneurship by expanding the pool of investors beyond the traditional circle of owners, relatives and venture capitalists. Crowdfunding has created the opportunity for entrepreneurs to raise hundreds of thousands or millions of dollars from anyone with money to invest. Crowdfunding provides a forum to anyone with an idea to pitch it in front of waiting investors. Crowdfunding allows investors to select from hundreds of projects and invest as little as $10. However, restrictions apply to who is allowed to fund a new business and how much they are allowed to contribute. In most jurisdictions, restrictions apply to who can fund a new business and how much they are allowed to contribute. Similar to the restrictions on hedge fund investing these regulations are supposed to protect unsophisticated or non-wealthy investors from putting too much of their savings at risk. Because, so many new businesses fail, their investors face a high risk of losing their principal Crowdfunding sites generate revenue from a percentage of the funds raised. But, crowdfunding is hard work. On many sites, the vast majority of people who try crowdfunding fail to meet their goal. But for those who plan ahead, prepare properly and execute a plan the right way. the chances of success are much greater. BSE-PUBLC Many entrepreneurs see rewards based crowdfunding, when a perk or a product is provided to a donor as opposed to equity, as an easy way to raise money. But if you don't have a very good idea or

15:53 @at Sulle Seed Capital - Read-only Read Only - You can't save changes to this f... v Crowdfunding sites generate revenue from a percentage of the funds raised. But, crowdfunding is hard work On many sites, the vast majority of people who try crowdfunding fail to meet their goal. But for those who plan ahead, prepare properly and execute a plan the right way. the chances of success are much greater. Many entrepreneurs see rewards-based crowdfunding, when a perk or a product is provided to a donar as opposed to equity, as an easy way to raise money. But if you don't have a very good idea or a product that excites people, it's not going to work Here are some important things to understand when trying to raise money through crowdfunding 1. Make sure you have a product that works for crowdfunding. Campaigns for gadgets, video games and films have a high level of success. Campaigns centered on causes in the news or that truly touch people's hearts are often successful but raising tens of thousands of dollars for a new nonprofit group supporting an arcane issue is not going to work. Raising a lot of money for a personal need rarely works. 2. Set a realistic funding goal. According to a crowdsourcing website, only 2 percent of the campaigns that successfully raised funds on the site raised more than $100,000. Compare that to the 73 percent of the successful campaigns that raised $10,000 or less. If you are lookine to raise more than $10,000, rewards-based crowdfunding will be a long shot, with very few exceptions. 3. Plan to spend 30 to 60 days before a crowdfunding campaign is launched That's the time required to hone the project, create a great video, develop compelling rewards, reach out to potential supporters who will be ready to donate on Day 1, write and schedule al the social media postings and emails, and contact media sources and bloggers to build rapport for possible public relations opportunities. If you do not take this part seriously, your chances at success may be greatly diminished. Nearly every successful campaign has about 30 percent of its crowdfunding goal committed through family, friends and a network of close connections before it is launched. Without that initial boost of donations hitting a campaign early, the success rate is very low The overwhelming majority of successful campaigns that raise significant funds involve products that are pre-ordered. The good news is, when it works, significant amounts of money can be raised. The process can net low-cost publicity and buzz for a product or business. It's possible to test the market for an idea of product without spending much money. You may build a rabid social media following and an excited and vocal base of customers who want the company to succeed. Sources for theory: https://startuxplore.com/en/bioetvees-startup-investinal https://inc42.com/fundraising 101/how-to raise-seed-funding and angel-funding for startups india/ https://www.investopedia.com/terms/c/crowdfunding.asp https://www.entrepreneur.com/article/234516