Rakesh, Rohit and Ravi, promoters of a private limited company, now a day, searching the financial markets to locate various sources of raising funds, so that the needed funds could be arranged at least possible cost. For this they are also taking the help of a Financial Analyst. Identify the type of feasible study they are involved now a days.
Answers
Answer:
. Fund raising is long and tiring experience everywhere and India is no exception.
2. VC funding is biased towards software ventures because of superior business models, exit options and growth opportunities. Investing in other sectors is not tracked with same passion.
3. From BIg money people point fo view Venture capital is just another investment class hence'show me the money' rule applies. Hyper growth leading to 3–10x returns in 5–8 yr period drives investing decisions.
4. Most ideas are worthless unless you are next Elan Musk or Peter thiel. Top class VC money is classical 'growth finance' i.e money to scale and grow a legal, viable, young business that have found traction ( i.e.have payingcustomers). Without traction there no reaosn for on investing money in growth ehnce no funding.
5. Most start-ups raise seed money from friends, family and fools (angels). There is no reason same cannot be done in India. With the cost of developing a working software prototype falling rapidly I think next best source of money is paying customer unless you want to join mindless ‘unicorn’ race by bribing customers.
6. Best way to get funding is never to seek it. Fina a niche market where you can iterate ideas and build cutsomer base cheaply. Bill gates startes selling software in 1972 when ahrdware was big deal and software is treated as freebie. Apple launched personal computer when computer industry leaders thought masses do not need a PC. To win big you have to be contrarion and proven right.
7. Once you have paying customer base smart money will find you.
8. Uber of X, Tinder of Y, kayak of Z are lazy ideas. VC toy with such themes in their free time (read VC blogs, follow them on social media and you know what I mean) and you will give little attention for such ideal thinking. But again heard mentality is common in investing world and VC and founders are not immune to it. Bad ideas including ‘me too’ do get funded . This is not good enough reasons to persue such ideas.
9. People with right credential ( stanford, iit, harvard, google, facebook) and connection (ex CXO/VP) can raise millions based on just a vision & sketch on back of napkin but that will not work for other 95% first time founders. You need something far more real.
10. Funding is negotiation. Spend time to understand your needs, your expectations and that of other side. Traction give you leverage so does a strong team, positive introductions from people VCs trust. Work on developing your leverage or BATNA.
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