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WHAT WILL YOU GET FROM READING IT?
Get a Clear Understanding of what Angels and VCs are.
HOW DOES ANGEL AND VC MONEY WORK?
Learn why they invest in startups and how they win.
The Complete Guide to getting your Startup Funded. What is a VC Fund? What is an accelerator? How do they work? What documents do you need? All will be explained.
#ALL the Documents you'll need for your investment round!
Getting Started with this Guide
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writing this guide.
All about the Alternative Ways of Financing Your Startup Business
- Why choose this path?
- What financing options are available out there?
- What are Startup Accelerators?
- Where can I see ALL The Accelerators and VC funds?
- What are Incubators
- Who are the Angel Investors?
- What are VCs and VC investment funds?
- Can I get financing from Government Programs?
- What documents will I need in order to get an investment?
- Where can I get documents from?
- Where can I find investors?
- How do I find investors?
- What is a Seed Round? What about a Series A financing round?
- How many investors join a Series B financing round?
- Seed Funding, Series A, Series B, Series C, Series D. What are those?
- Crowdfunding: How does it Work?
- Accelerators Run by Corporations
"I received a nice Angel Investment from two great Angels and I turned down about $5,000,000 in VC funding"
Florin Muresan, CEO of Squirrly
Intro: Funding Your Startup is Now a Piece of Cake
So many cakes out there: chocolate cake, applesauce cake, butter cake, vanilla cake, and the list goes on and on!
So many ways of funding your startup: government programs, VC funds, angel investment, crowd-funding, and so many more buzzwords wearing you out!
In this part of the article, I'll take you step by step through all these big words, clarify to you how you can successfully fund your startup, and hopefully make you a better entrepreneur! Let's take them slice by slice.
Funding your startup. Slice by Slice
1. Government programs (the perfect taste of chocolate).
There are many government programs out there, just waiting for you to grab their hand for funding your startup. I'll show you:
1a) Are you a Canadian?
If so, you got lucky, in a way. Canada is said to have the greatest number of government programs.
Even so, it is harder than anywhere else to get to the grants, because of the decentralized administration. You should know that the money isn't disappointing. In the Canadian Press, David Padon states : "Cisco Canada plans to invest $150 million over 10 years in a variety of Canadian startup companies, technology development incubators and new technologies that it thinks have the potential to affect the global market."
What's more, in January 2013 the Venture Capital Fund: Action Plan was launched. They Plan on investing $400 million over several years, with the hope of raising about $1 billion in the private sector investment in small and mid-sized innovative companies. $250 million of the sum is used for establishing large "funds of funds", which will partner with institutional and corporate investors.
1b) Now... What about living in Australia?
The Australian government (business.gov.au) offers programs for businesses of all sizes. They offer startups incentives, support, tax and duty cuts, and assistance. They encourage collaboration between industry and researchers, so navigating their site could be worth a go.
Well, if you're neither a Canadian, nor an Australian (like me) and you'd like a simple way of finding a government program, you should look at The Funding Portal, which is international, and that's awesome.
It's also online, and that's way up the hill!
In a recent article, Marjo Johne gives us all the major details about the program, pointing out how it was founded and what it does for entrepreneurs.
The Funding Portal is "a Web-based service where businesses can find and apply for government or private funding.", in her own words.
What it does is: it offers information on more than 7.000 funding sources online, one-on-one support services, 85 experts in entrepreneurship at your disposal, in-house expertise, and of the funding programs on The Funding Portal, about 4500 are from the government, while 2500 are private.
Not to mention, it takes only about 30 seconds to review one of the programs. And the application is easier than ever, at just one click away!
The world's best startup hub: Startup Chile.
Giving us 5+1 reasons why Startup Chile rocks! Ioustinos Sarris shows us why the program is so worth every minute!
He is quick to point out that Startup Chile is an incubator, while Rockstart (we'll talk about it in a sec) is an accelerator, because of the way it offers speed and progress.
A year ago, when they attended the event there were about 100 startups, and there were workshops and mentoring sessions. It is great if you are a native there, as the program offers great connections, and it makes you feel part of a greater community.
It is a program created by the Chilean Government, which aims to help the local entrepreneurs improve their startups and go global. In 2010, the program brought to Chile 22 startups from 14 countries, providing them with $40.000 and a 1-year visa, in order for them to develop their projects for 6 months.
They also had access to the most potent social and capital networks in the country. Those selected were voted by Silicon Valley experts and the Chilean Innovation board, who focuses on globalization. In 2011 they brought 300 startups to Chile during a year, and in 2014, 1000 participated in the program. There's still place for more!
Crowdfunding: add a little sugar!
On the Squirrly blog there are many posts related to crowdfunding, if you're interested in this you can subscribe to our newsfeed, and we'd make sure to keep you well informed.
Crowdfunding involves having a group of people/backers - the crowd - who finance your initiative/idea/startup.
It usually takes place on the internet.
The initiative could be nonprofit, political, charitable, commercial or a financing campaign for a startup company.
Crowdfunding involves the participation of many. We have the people or organizations that propose the ideas and projects to be funded, and the crowd of people who support the proposals.
Crowdfunding is then supported by an organization (the "platform"), which brings together the project initiator and the crowd.
There are many types of crowdfunding, which you can resort to for funding your startup. I'll take you through them and give you some examples.
It's a type of crowdfunding in which investors buy equity (or convertible debt) in startups. This type of funding can only come from "accredited" investors, who meet some thresholds of wealth or income.
In this category we have AngelList and FundersClub.
It was introduced by GoFundMe, "the world's most prominent donation-based crowdfunding platform".
In this type of crowdfunding people can raise money in the form of charity, for their personal problems, for accidents and traumas, for social causes and healthcare costs.
“Project” Marketplace Crowdfunding.
This type of crowdfunding is so varied and different, many platforms adhere to this category.
A wide range of projects fit in here, such as launching some art - a book, movie, music, paintings - technological breakthroughs and inventions, and non-profit organizations.
Widely known platforms are IndieGoGo, Kickstarter, Quirky, etc.
The startups get funded by backers, and usually there is a percentage from the donors' sum that you need to return in case you fail or succeed.
This one is something very new and popular. It is industry specific and it has been trending in 2014.
Like CrowdStreet for real estate business projects or DragonInnovation for hardware/device companies, they target specific types of business.
Accelerators ::: some maple syrup
Startup accelerators or seed accelerators are built in order to support the rapid growth of the companies which work with them.
They are programs, usually on the Internet, which include mentorship and workshops, courses, which have as their peak a public event or a demo day.
They offer access to technology, office space and great communities, funding, usually in exchange for company stock.
Accelerators can be either privately or publicly funded, and focus on many industries.
There are classic accelerators like Y Combinator, or Corporate-owned accelerators: like Evernote's accelerator.
While anyone can enter an accelerator, the competition is pretty high, Y Combinator and TechStars have application acceptance rates between 1% and 3%. Moreover, the focus is on teams, not on individuals.
You also have a deadline to fulfill, typically after 3 months, while you receive training and mentoring, and you are expected to grow rapidly. You'll also get peer support and feedback, which is very important.
Basically, I'll follow you through 2 types of accelerators:
Accelerators acting like micro VCs early on, where there are many partners, who share, and pool small amounts of money and invest them into many startups.
Twice a year they invest a small amount of money, about $120k, in a great number of startups( "most recently 68"). Next, they help these companies improve, by moving together with them for 3 months to Silicon Valley, where they work intensively.
Each cycle ends with a Demo Day, when the startups present what they achieved to a select audience.
They provide $118.000 in seed funding, they offer intensive mentorship, a great online community and alumni for 7-10% equity in your company. They suggest that after joining them for 90 days, your company will reach an average of $2M in follow-on investment. More than 35 startups joining them have already been acquired.
They provide seed-funding. They have a 3-pillar strategy, helping startups build global companies, by offering Learning, Network and Capital. Initially, they invest from $0-$250K, and they accelerate the startup from seed funding to IPO.
They offer you connections with their Mentors - 1000 Operators and 500 Investors and Founders. They also provide a learning platform which helps founders to access the billion dollar playbook of their Mentors.
They provide great connectivity, a network of 1000+ founders and 200+mentors, experts in marketing, startup accounting, user testing, product design, sales, etc.
They help and support startups in all possible ways. They offer startups in their program up to 15.000 pounds in seed funding.
They'll take care of all those annoying papers, such as the legal and administrative distractions and they'll offer you 99 master-minds with whom to share your ideas and to tackle problems.
However, it will take 8% equity stake. Find out more details from their own founder, Oscar Kneppers:
Accelerators which are backed by greater businesses and firms.
It's a Romanian media company, founded in 1991 and settled in Bucharest. It's a part of the MediaPro Group and it mainly produces news and photography service, which covers 90% of the Romanian printed media needs and 70% of the national TV and radio stations. In 2003, Mediafax content services expanded to Mediafax Mobility to offer mobile content, to firms such as Orange and Vodafone. Nowadays, Mediafax has 4.5m euros in revenue.
Working Capital Accelerator. It began in 2009. It supports the development of startups. It has supported 179 startups up till now. It offered 109 Grants, 19 startups were funded and incubated, 36 pre-incubated, and they started in 2013 for the first time, 15 acceleration programs. In 2014 (may 26th), 41 projects of Call for Ideas were added.
Hub:raum. It is a German accelerator, belonging to Deutsche Telekom. It provides connection to one of the world’s leading telecommunications companies. It invests in early stage startups, backs them with co-working-space, mentors them and offers them connections.
The Evernote Accelerator. It is a very new program and it facilitates apps which work with Evernote. It comprises 4 weeks, in which teams from different startups study startup curriculums, attend workshops held by Evernote engineers and designers, in the space provided for the activities in the Evernote building. They also get to connect with Silicon Valley influencers. The event has as its climax a demo day, on the 14th of November. Such an event already took place last year, when all teams won their spot with their apps by competing in the Evernote Devcup competition.
Wayra. It's an English accelerator which facilitates startups in Europe and Latin America. In the first 6 months they will offer your startup up to 50.000 euros. They help you access private funding, such as financing rounds, and public funding, such as grants and subsidies. They even have their own network of Business Angels, mentors and partners. They provide direct management and mentoring, technological resources: Telefonica I+D, which is one of the leading private R&D centers in Spain. It also has one workspace in each of the 9 countries it works with.
Documentele si resursele de care ai nevoie
pentru a obtine finantare
Cartea lui Brad Feld despre VC Contracts
Liste de resurse, cu Linkuri
Documente pentru Investitii
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