A startup entrepreneur comes up with what could be the real next big thing. But after that comes the real test – translating that billion dollar idea into a fully scalable and successful business model in the high stakes, real time business world.
Which brings us to that critical point – startup capital for business. And one question that every startup seeks answers to is – what is the best way to raise capital for a startup? One of the most nerve-wracking aspects of being an entrepreneur is pitching to investors. But, CoffeeMug.ai is here to make this process hassle free. It is a powerful online platform, a network of industry specialists with hands-on experience in guiding rising entrepreneurs find their way to the world of business.
It’s all about putting that first step right…
Accessing startup capital for new business challenges every early stage entrepreneur. They often trip at this hurdle, not knowing ways to raise capital for startup. Thankfully the startup ecosystem has evolved. Investors are demonstrating positive intent and startup capital investment is witnessing an exciting upswing.
A YourStory Report quotes that in Q3 2021, 23 funding deals with ticket sizes equal to or more than an astonishing $ 100 million were inked. The site investindia.gov.in has it on record that in 2021 itself, India got 42 unicorns with a total valuation of $ 82.1 Bn.
What does all this mean to a startup? It means there are ways to raise capital for a startup. What is needed is a smart strategy to get startup capital for new business.
The SOUP Method – Study, Observe, Understand, Pitch
Scouting for startup capital investment is a task. So to begin with, it entails some hard nosed fact finding about the current PE market.
First Studying the who’s who in the current hierarchy of PE investors, getting to understand their preferences and also having an insight as to which investing teams are actively inviting pitches is a must do. It helps bring things into sharp focus.
Then it is a matter of diligently Observing investing trends for startup capital. Maintaining an updated checklist of the business verticals, the ticket size, the investing team, is the way to go. All this will help to narrow down and target a choice set of PE investors.
This of course further leads to forming a more in-depth Understanding of the PE investors pulse at the moment, the mood, the preparedness to fund and more.
All this groundwork can then culminate into a professional investor Pitch for startup capital for business, which is truly fine-tuned and comes with a higher success rate, simply because it is based on solid insights and is well timed to match evolving market sentiments.
It’s Matchmaking of a different kind at play here
What is crucial to remember when getting ready to pitch for startup capital, is that the game is all about finding the right match.
The right PE investor team who believes in the idea as much as the startup owner does, is what can make this almost symbiotic relationship flourish and rake in handsome ROI. Just glance through the list mentioned below.
Silver Lake Partners – Byjus
Chrys Capital – Awfis, FirstCry, Dream Sports
Sequoia India – Zomato, Free charge, OYO Rooms, Practo, Cred
Ascent Capital Advisors – Big Basket
All incredible success stories, for both the entrepreneur looking for the best way to raise capital for startup, as well as the PE investors.
It’s the timing that can make or break a startup and the investment
The timing of the pitch for investment or the timing of the decision by a PE Investor to support a startup, in both cases timing is everything.
The pandemic for example saw the Health Tech and Edtech sector pull in plus size investments. Now since this was something that addressed an immediate need and impacted human life, investments were made right from the initial seed stage itself.
Lockdown also saw the online groceries, food deliveries, fashion and small businesses portals attract a fresh infusion of Series B funding to fuel further growth. The online payments vertical too were flush with funds, with new rounds of investments coming their way in response to record-breaking new sign-ups. Entertainment and online content consumption also were sectors that got noticeable investments.
All this is simply indicative of the fact that it is up to both, the PE investor team and the startup founders, to decide how and when to approach each other to start a relationship.
Here is how you could perhaps build warm connections
Connect with CoffeeMug.ai, an online professional networking platform, which ends all the waiting that happens on most other networks for a connection to be made. CoffeeMug.ai works smartly, curates, and connects you with a relevant member, keeping your connection objective and context in perspective. This leads to genuine conversations and perhaps that deal you were looking for, coming through. So if you are looking for advice on ways to raise capital for a startup this could be your platform to explore.
FAQs
Q. What is startup capital?
A. The money required to launch a new business is known as startup capital. Startup cash may be required to cover costs such as office space, permits, licensing, office accessories, marketing, and any other expenses associated with launching a new company.
Q. What happens to investors if a company fails?
A. Ideally, investors will lose all their invested money, only gaining a small portion of profits through the company sale of assets and payment of any liabilities the business might have made. This amount will later get divided amongst the shareholders on a pro-rata basis.
Q. What is the difference between working capital and start-up capital?
A. Working capital represents the company’s cash flow. It is the short-term analyzer of companies operating performance, liquidity, and financial health. Startup capital is the initial capital required to run the business smoothly. This capital came from entrepreneurs, family, and friends, or even external investors like venture capitalists and business angels.
Q. When should I start raising capital?
A. You should consider raising capital only when you are ready to take your company to the next level. In general, there is no rule as to how much money to raise. You can always raise an amount you feel confident about.
Q.How will investors be paid back?
A. Every investor has the following payback options:
- Investors who provide a loan can be repaid by a monthly schedule or as a lump sum.
- You can purchase back the investors share in the company at a buyback price.
- If a company’s lump-sum transaction is getting stretched and making your finances thin, you can consider paying dividends to your stockholders out of the net income.
