Startupstreets.com, in association with Intellex Consulting (www.Intellexconsulting.com) and Intellex Finance (www.intellexfinance.com) arrange various financial guidance and assistance to Start-ups and growth stage Companies in India.
Intellex Finance has a team that exclusively works on arranging equity funding for its clients at every stage of its growth.
Broadly, there are five distinct stages of venture capital funding: start-upstage, seed or early stage, growthstage, late stage, and buyouts/recapitalizations. Increasingly, angel investors and seed stage VC funds are competing with each other for investments in the $100K – $2 million range in India.
Venture capital financing is a type of financing by venture capital. It is private equity capital provided as seed funding to early-stage, high-potential, growth companies (startup companies) or more often it is after the seed funding round as a growth funding round (also referred to as series A round).
We will roughly break down the stages of VC funding – there’s no universal model, but a lot of firms follow a similar set of steps – so that you can get a glimpse at what startups go through while raising enough money to deliver high-quality, scalable and frequently free apps to users.
Stage 1: Seed capital
The descriptor “seed” is appropriate here, since it suggests money that will fuel a startup’s growth down the road. At this point, the leaders of a startup may not have any commercially available product yet and are instead most likely focused on convincing investors why their ideas are worthy of VC support.
Seed funding rounds are typically small and are channeled toward research and development of an initial product. The money may also be used for conducting market research or expanding the team. There are seed accelerators out there, like Y Combinator, that accept applicants, provide seed capital and offer an opportunity to demo a solution to major investors.
Stage 2: Startup capital
This stage is similar to the seed stage. With initial market analysis conducted and business plans in place, companies look to begin marketing and advertising the product and acquiring customers.
Organizations at this stage likely have at least a sample product available. VC funding may be diverted to acquiring more management personnel, fine-tuning the product/service or conducting additional research.
Stage 3: Early stage/first stage/second stage capital
Though sometimes called “first stage,” this stage only comes after the seed and startup ones in most cases. Funding received at this stage will often go toward manufacturing and production facilities, sales and more marketing.
The amount invested here may be significantly higher than during prior stages. At this point, the company may also be moving toward profitability as it pushes its products and advertisements to a wider audience.
Stage 4: Expansion stage/second stage/third stage capital
Growth is often exponential by this stage. Accordingly, VC funding serves as more fuel for the fire, enabling expansion to additional markets (e.g., other cities or countries) and diversification and differentiation of product lines.
With a commercially available product, a startup at this stage should be taking in ample revenue, if not profit. Many companies that get expansion funding have been in business for two to three years
Stage 5: Mezzanine/bridge/pre-public stage
After reaching this juncture, the company may be looking to go public, given that its products and services have found suitable traction. Funds received here can be used for activities such as:
Mergers and acquisitions
Price reductions/other measures to drive out competitors
Financing the steps toward an initial public offering
If all goes well, investors may sell their shares and end their engagement with the company, having made a healthy return. Many tech IPOs – think Facebook, Twitter and Yelp – were only possible after years of VC funding that fueled user and revenue growth. There’s a saying that there’s no such thing as a free lunch, and VC funding of free apps and services is a good case in point.
Intellex can advise you at every stage of fund raising. Email your Company profile and Business plan to [email protected] or whatsapp on 9820088394 to know more or discuss further