![]() The funding for a startup follows a typical chain of rounds. Therefore, the investor not only benefits from the profits of the startup during the short-term but also the valuations of the startup over the long-term. The firm seeking investment should be prepared with a well-documented business plan describing its target market segment, market potential, existing and potential competitors, and its financial projections for next few years.įunding rounds for startups are designed in such a way that an investor obtains partial ownership in the startup. Along with the idea, the pitch made in front of the investor is equally essential. To raise seed funds, it is imperative to have a creative business idea that can be commercialized. VC funding: Venture Capitalists are the high-end investors that invest in a new venture after looking into various parameters such as market conditions, founder vision, growth potential, etc.Unlike most incubators, accelerators usually take equity. They also provide help through various training, mentoring, and giving networking opportunities. Accelerators: These investors mainly focus on helping the new firms in scaling-up rather than supporting them in early-stage innovation.Generally, Incubators do not ask for equity holdings from start-ups. Many leading educational institutes, like IITs and IIMs, also provide such services. Incubators: These investors, along with providing small seed funds, focus on helping the new ventures through training and often also provide office space.Angel Investors: These are the investors who invest seed funds in a start-up in return for equity ownership or convertible debt. ![]() Such investments can prove to be very useful for new firms to build their brand. Large companies like Google, Intel, and Apple support start-ups regularly with seed funding.
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