Startup Financing
Startup Financing
Risk Financer: There is no guarantee against his Financer: The lender has no control over the business's Financer: There is a risk of the startup not meeting the
investment. operations. goal or objective for which the grant has been provided.
Startup: Startups need to give up a portion of their Startup: You may need to provide a business asset as Startup: There is a risk of the startup not receiving a
ownership to shareholders. collateral. portion of the grant due to several reasons.
Threshold of While startups are under lesser pressure to adhere to Startups need to constantly adhere to repayment timeline Grants are distributed in different tranches w.r.t the
Commitment a repayment timeline, investors are constantly trying which results in more efforts to generate cash flows to fulfilment of the corresponding milestone. Thus, a
to achieve growth targets meet interest repayments status is constantly working to achieve the milestones
laid down.
Return to Capital growth for investors Interest payments No Return
Investor
Involvement in Equity Investors usually prefer to involve Debt Fund has very less involvement in decision-making No direct involvement in decision making
Decisions themselves in the decision-making process
Sources Angel Investors Self-financing Family and Friends Banks Non-Banking Financial Institutions Government Central Government State Governments Corporate
Venture Capitalists Crowd Funding Loan Schemes Challenges Grant Programs of Private Entities
Incubators/Accelerators
Stages of Startups and Source of Funding
Steps to Startup Fund Raising
•Preparation of Pitchdeck
•Investor Targeting
•Term Sheet
What do investors look for in startups?
Competitive
Market Landscape Exit Avenues
Analysis
What do investors invest in startups?
Startup India Funding Support
1. SIDBI Fund of Funds Scheme
• The Government of India formed a fund of INR 10,000 CR
• Fund of Funds for Startups (FFS),
• Approved by the Cabinet and
• Established by the Department for Promotion of Industry and Internal Trade (DPIIT) in June 2016.
• SEBI-registered Alternate Investment Funds (AIFs), (daughter funds)
• Investments in venture capital and AIFs that in turn invest in startups.
• Funding is provided to startups across different life cycles.