Overview for Raising Money for Your Start-up Company Entrepreneurs face a great deal of challenges in building a successful venture. They have to identify a good opportunity, in a thriving industry, organize a competent management team, out pace the competition, and build a product and/or provide a service that is worthwhile to others. However, in spite of all these obstacles, raising money to seed or grow a company is often the largest challenge of all. The following paper will discuss the business and legal process of raising capital. There are various stages in the lifecycle of a business, and each has their own unique funding requirements. Our discussion will primarily concern scalable businesses that are headed towards professional or venture investment. The vast majority of businesses will never get any professional investment. The entrepreneur may fund the business themselves, take out loans, or raise some money from friends and family. The primary distinction is the end goal. A lifestyle business is one that provides its owners, shareholders, or members with revenues and profits sufficient to sustain their needs (even extravagant ones). These businesses may or may not have resale value, but typically would not provide outside investors with a substantial return. In contrast a venture business, while much riskier, typically will provide outside investors with a liquidity event that has the potential to provide very large returns. Idea Phase o Entrepreneur has the idea for a product or service o Writes a business plan to identify the critical business and financial issues o Bootstraps the initial product or service Seed Phase o Entrepreneur seeks to validate their concept o Additional capital is required to buy more product or offer the service o A combination of Bootstrapping and raising money from Friends and Family Round A o The concept has been validated or the market opportunity is large and the business is very scalable o Entrepreneur needs more access to capital to stay competitive in the marketplace and grow their business o Entrepreneur seeks our Angel Investment Venture Round o The business has a viable opportunity for a large exit either through an acquisition or an Initial Public Offering o Management team needs access to a large amount of capital to make it to profitability, exponentially grow the business, and/or position the company for an acquisition.
"Overview for Raising Money for Your Start"