An IT startup is an awesome business idea, but getting funding for it can be rather challenging. If you want your startup to succeed, as well as to keep the momentum going, you’ll need to find ways to get money for your startup. No matter whether it’s a new cool app or some unconventional service that offers cheap essays online, raising money for the company will be one of the first steps you’ll need to take.
Convincing investors can be tough. Therefore, learning more about the stages of startup funding will help you be more prepared for your meetings with potential investors. If you understand what you are required to do at each stage, convincing investors to engage and become a part of your startup will get easier no matter whether you are trying to present to them the cheapest essay writing tool or a service that makes their everyday life easier.
Here are the stages of IT startup funding.
1. Seed Capital
This is the earliest investment source for your startup. The sources you can get money from at this stage include your own savings, money which your friends and family can lend you, credit cards, and crowdfunding. You might even have researched “how much can I get for a title loan” at some point to try that for seed funding. Depending on the type of startup and the amount of money you need, it may either be enough at first or will only serve as a first investment wave for developing your startup.
If you have created a service similar to CheetahPapers.com and want to provide cheap essays online as well, you will need a huge team of experts who will help students with their assignments, as well as be able to offer cheap essay help all year round. Thus, the first thing you should do at this stage is present your idea and explain how you are going to make money once your business is up and running.
In this case, your goal is to prove why offering essay writing services cheap is still relevant, as well as show how many students are still looking for the cheapest essay writing agency on the internet. Keep in mind that you are supposed to offer a deadline when you are going to return the money you borrowed, as well as provide regular updates. If you want to launch a cheap essay paper writing business, a lot of work is ahead of you.
2. Angel Investor Funding
As soon as your startup starts to grow and you are going to need more money, accredited angel investors, also known as SEC, are the best option at this stage. These are people whose net worth is at least one million dollars while their annual income is no less than two hundred thousand dollars.
The main difference between angel investors and other types of investors is that these people use their own money for startup financing, and they either invest individually or pool their money with a group of other angel investors. At this stage of IT startup funding, you will need to prepare a convincing pitch and present a properly researched document together with a detailed business plan.
3. Venture Capital Financing
This stage of IT startup funding presupposes that your startup has already become profitable, but you can still benefit from having a new wave of investment. Thus, venture capital financing can help you increase your marketing budget or scale new business channels.
What is also vital to mention is that you can expect to get multiple rounds of funding from different investors. Since it’s getting more and more serious at this stage, you should expect tons of questions from potential investors. You should be prepared to answer them.
4. Bridge Loans and Mezzanine Financing
This is the stage where your IT startup starts to look like an interesting commercial product. You’re getting regular revenue even if the startup is not 100% profitable at this point.
The reason why you might need new funds is to expand your business, as well as to find new options for mergers and acquisitions. In addition, you may also start preparing your startup for an IPO at this stage, and mezzanine financing can help you cover these expenses. Keep in mind that your investors will need to see a clear roadmap towards profits.
Even though IPO is not the goal of every IT startup founder, a lot of them are often willing to choose this option as soon as it becomes available. IPO stands for initial public offering. Going public helps your startup to expand further.
After the IPO, it is quite common for the stocks of the company to be leveraged as it helps to attract new talent. What is more, it is a great way to push your business forward. As soon as your business is on the NASDAQ, you can finally stop referring to it as a startup. You are a company that’s playing in the big league now.
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