How start up gets money different funds at each level



How start up gets money different funds at each level
How start up gets money different funds at each level


working of a start up fund
How a start up funding works


Angel investment

an angel investor is someone who puts their own finance into the growth of a small business at an early stage, also potentially contributing their advice and business experience. They might be a wealthy, well-connected individual who’s taken a personal liking to your product, a group of angel investors who club together to fund startups, or even a friend or member of your family who’s decided to put some money in.
Angels make their own decision about the investment, and in return for providing personal equity they take shares in the business. The amount they invest is flexible – it could be a small amount to get you off the ground, or a larger amount. While they can provide insight and advice about your business, their job isn’t to build up your company.

Venture capital

Venture capital funding is a whole other level. For a start, rather than individual investors, winning venture capital usually involves a whole firm – investors, board members, and people whose job is to generally help your business develop.  Venture capital firms are made of professional investors, and their money comes from a variety of sources – corporations and individuals, private and public pension funds, foundations.
Those who invest money in venture capital funds are called ‘limited partners’; those managing the fund and working with individual companies are called ‘general partners’, and these are the people who work with the startup to ensure that its developing.
The job of venture capital firms is to find businesses with high growth potential. The firm take shares and have a say in the future of the company and its running, and in exchange for their involvement venture capitalist firms expect a high return on investment. After a period of time, often years, the venture capitalists sell shares in the company back to the owners or through an initial public offering, hopefully making much more that what they put in.
Venture capital usually deals with very large amounts of money – rather than seed funding, it can be multi-million deals. And while more and more startups are winning venture capitalism investment, with the sums involved and the risk of investing in a startup, businesses a bit further down the line might be more likely to gain the trust and money of venture capitalists.

Key differences between angel investment and Venture capital investment (angel investment Vs Venture capital)


The Stage Of The Company

Generally speaking, angels are looking to invest in startups and early-stage businesses that are just starting to engage in technical development and market research. In contrast, venture capitalists rarely back startups unless there are unique circumstances, like well-known or already successful founders. Instead, they most often invest in emerging businesses that are more established, seeing them through their growth stages and into IPOs or mergers.
Amounts invested
Angel investors will put in a variety of amounts, but as it’s generally seed funding you’re not looking at the kind of figures that VC investment deals with. As a general rule, groups of angel investors might go as high as £1 million – but VC firms are unlikely to invest less than £1 million. Because so much time and effort goes into brokering a VC deal, it needs to be worth the company’s while.
While the concept of too much funding might seem ridiculous to cash-strapped startups, with great funding comes great expectations, which is a lot of pressure to put on a fledgling business. You have obligations to your investors, and overvaluation of your startup can have serious consequences down the line.
Who they invest in
Angel investors specialise in early-stage businesses, while VC firms are generally more unwilling to invest in startups unless they show really compelling promise and growth potential (though this is changing as the startup scene continues to flourish). While incredibly exciting startups in key industries might be able to win VC funding with little track record, most businesses will have to demonstrate that they can walk the walk, not just talk the talk.
Involvement
Unlike venture capitalists, angel investors typically use their own money to fund an entrepreneurial venture they find interesting and potentially profitable at start-up. Venture capitalists, on the other hand, do not use their own money as a rule.
Angel investors might have valuable advice for you, but ultimately they can be as hands-on or hands-off as you want. They will have equity in your business but will not have a seat on your board – unlike with VC investment. Agreeing to VC investment means committing to bringing more people into how your business, people who have a say in how it’s run and whose job it is to help your business reach its potential. While this can be a huge positive, if you’re at an early stage it might be overkill, and you might not have the flexibility to pivot or change focus – too many cooks can spoil the broth, so to speak.
Timescales
VC firms need to evaluate their involvement with you – due diligence, research, and all the other aspects that help them decide if investing in you is a smart business decision that will see them reap a big return. This all takes time. On the other hand, angel investors can make quick decisions, as they’re often working alone or have a personal interest in the business.

The Length Of Investment

Venture capitalists tend to be invested for a lot longer than angel investors. Angels are commonly invested for a period of two to five years before exiting the investment. In contrast, venture capitalists typically stay invested for at least 10 years before getting out.
Whether either angel or venture capital investing is right for you will ultimately depend on a combination of the above factors. Just as no two businesses are the same, there’s no hard-and-fast rule that dictates which form of capital to seek out at any given time. A trusted business law attorney who understands the ins and outs of angel and venture capital investing can help you determine what source of funding is best for your unique business.
Motivations
The job of VC firms is to find the best businesses, help them, and then make a lot of money. For angel investors, their motivations might be different – to help less experienced businesses within their sector, for example (though making a return on investment is also a factor, of course!)


Crowdfunding
a new and easy way to collect money . 
Crowdfunding is the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet. Crowdfunding is a form of crowdsourcing and of alternative finance


 incubator for startups

A startup incubator is a collaborative program designed to help new startup succeed. The sole purpose of a startup incubator is to help entrepreneurs grow their business. Startup incubators are usually non-profit organizations, which are usually run by both public and private entities
Incubators do not traditionally provide capital to startups


accelerator for start up

Startup accelerators, also known as seed accelerators, are fixed-term, cohort-based programs, that include mentorship and educational components and culminate in a public pitch event or demo day. ... Unlike business incubators, the application process for startup accelerators is open to anyone, but highly competitive.
Accelerators do invest a specific amount of capital in startups in exchange for a predetermined percentage of equity.





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