Every business needs capital to grow, which is one of the strongest and dominant forces affecting any kind of business and industry. So does a startup. Since not all startups have huge amount of capital to invest in their product, before launching their product and once launched to sustain in the market while combating their competitors and other market forces, all they can do is depend on external sources.
Raising funds from outside can be of two types namely, debt financing and equity.
Debt financing refers the capital raised wherein one has to pay interest on the capital raised. Equity financing implies to providing funds in lieu of owning a part of the company.
One can raise funds from sources like angels, VCs, engage etc.
While venture capital provides financial assistance to early- stage, high-potential companies for equity in the companies it invests it. These are medium funds that invest greater amounts of capital for greater amounts of equity. To name a few, Andreessen Horowitz, Sequoia Capital, Google Ventures, etc. are some portals rendering financial assistance.
Other sources include angels, super angels, micro seed funds/accelerators and growth equity.
While angels refers to a wealthy individual who invests his/ her own money, in a business usually they hold an expertise in. These people are ex-founders and affluent people.
A super angel is the lead investor in the group of angels (syndicates).
Micro Seed Funds are the ones doing a lot of small investments in lieu of less proportion of equities.
Accelerators like Y-Combinator, Kima Ventures, Techstars, etc. render multifarious services like mentorship, business connections and professional services (such as providing legal assistance for the company) by selling themselves.
Growth Equity is the one with an enormous amount of capital investing huge amount of money so as to expand a successful business model.For e.g. Summit Partners.
Now, to raise funds from either of the above-mentioned portals one needs to be thorough with his or her research before approaching them. Since, venture capitalists and private equities come across a lot of things happening every day and to get them invest…