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PROJECT TOPIC:

FINANCING IN STARTUPS (VENTURE CAPITAL)

Project Guide:- Prof. Pooja Singh

By: Karan Rajdeo

Class: TYBFM

Roll no. A039


INDEX

TOPIC SR. NO.

Introduction 1

Types of Funding 2

Venture Capital Spectrums/Stages 3

Venture Capital Investment Process 4

Funds other than VCs 5

Data Analysis & Interpretation 6

Case Studies 7

Challenges faced by start-ups in India 8

Success Mantra of Successful start-ups. 9

Conclusion 10
EXECUTIVE SUMMARY

A start-up is a young company that is just beginning to develop. Start-ups are usually small
and initially financed and operated by a handful of founders or one individual. In the early
stages, start-up companies' expenses tend to exceed their revenues as they work on
developing, testing and marketing their idea.

For start-ups, the main task is to get its funding and hence this article would contain the
sources of funding that a start-up needs.

It all starts with vision, the project, the product, and the service all these things that no one
has done it before. After you get your product or service ready, its time to get money for
running your business, now, who will give you the money to run your business? Maybe the
one who gets this as a good investment. The start-up funding is basically classified into three
sources.

1. Seed funding (Angel Investors)


2. Venture Capital
3. IPO

Before these, you can even get some funding from your family or friends against some minor
stakes of your company.

To explain the funding through a timeline, a start-up gets money through its own founder; it
perhaps could be a very slight amount which would be required at the initial stage, mostly for
administrative work such as renting a space, designing logo for company etc. Now while the
company is done with all the basic and petty works and has come up with a solid structure of
its product or service, it could look for seed funding. Seed funding or seed capital, is a form
of securities offering in which an investor invests capital in exchange for an equity stake in
the company. Seed money options include friends and family funding, angel funding, and
crowd funding. After that comes a Venture Capitalist. A venture capitalist is an investor who
either provides capital to start-up ventures or supports small companies that wish to expand
but do not have access to equities markets.
OBJECTIVES

1. To study the types of funding in a start-up


2. To study and analyse case studies of successful start-ups
3. To demonstrate statistical data on factors related to new companies
4. Understanding the financing challenges faced by start-ups in India
5. To analyse trends and patterns and also opinions on start-ups

REVIEW OF LITERATURE

Sharifi.O in its Research Article mainly focused on the challenges that are faced by startups
in terms of financing. He quoted that Funding is a major concern for startups and small
businesses. When the economy tanked, it made it harder to convince investors and banks
alike to part with the cash thats essential for growth in the early days of a business. Credit
today is tight, and its not clear precisely when it will become more readily available. Plus,
theres a growing trend of smaller initial investments in early stage startups

Andaleeb U and Dr. Singh stated in its Research Article that venture capital for startups are
the riskiest investment, but if the start-up booms, the returns are worth the risk. They said
Risks are an indispensable part of startup success. However, an alert and insightful mind is
necessary while making decisions relating startup activities to reduce any risk of failure.
Although challenges are a part of every startup, the determination to overcome these
challenges even in times of distress and doom is what makes a successful startup.

An article in Economic times specified about the number of factors that determine the cause
of Indian startups looking for settling abroad. When companies decide to move, they
should know whether the market is big enough. Unless that country can be a big market, it
does not make sense. Or the funding should be large enough, says Sathvik Muralidhar,
founder of Preksh, a Bengaluru-based startup that was selected for the Korean Startup
Challenge.
RESEARCH METHODOLOGY

To fulfil the objectives of this research paper quantitative and analytical type of research is
used. Also Some part of this Research Article contains primary data such as questionnaire
Data has been gathered from secondary sources like reports and publication of Govt.
Newspaper articles, other research articles over the internet and a bunch of websites.

SCOPE

1 The Research shall be based on Primary and Secondary Data, hence for primary data,
non response error cannot be ruled out.
2 The Research would analyze the current position of a Start-up in comparison with a
company
3 The Research would also point out the perception of people towards startup
4 The research would focus on conducting surveys

LIMITATIONS

1 Time Constraint
2 As the data collected is in the form of both Primary & Secondary, proper bifurcation
and data correctness could be a concern.
3 As Startups require its founders to work hard hence work stress is at its peak, so
getting their time for interview and their unbiased opinion is hard to find.
4 As collection of Primary Data would require travelling, money can be an issue.

CONCLUSION
It is well known that a very small number of start-up companies succeeds, and continues to
develop and make a profit after the market launch of products and services. Start-up
companies which are mainly defined as newly founded companies are usually associated
with high-tech projects, and are often lost on the way from the founding the start-up to
achieving a business success. This Research would guide you mainly upon the forms of
finance that a startup could avail which would also include loans, and private equity. Along
with that this research paper would include the basic idea about a startup and the factors
determining the success and failure of startups in India.