Startups,Investment • Aug. 2, 2022

Start-up Investing

Q. Why do Investors fund Start-ups?



Investors give funds to start-ups to gain profit. All that matters to them are how much return they can generate by investing in a particular start-up. They invest in the hope that Start-up's valuation will increase.


Limited Liability Partnership- You can start a business with a Limited Liability Partnership. Each partner in this partnership is only liable for the amount they invest in business. To become eligible for raising funding for a start-up, you will have to open a Pvt. Ltd. company or convert the company into Pvt. Ltd. from a proprietorship or LLP.



Q. Why are Start-ups growing?



Technology acquisition & market consolidation are the main drivers for increasing Merger & Acquisition of Indian Start-ups. Start-ups are adopting innovative approaches to attract talent. Planify is one of those start-ups focusing on acquiring & retaining talent with knowledge about the fintech industry.



Steps of Investment-


1. Ideation Stage- This is the first stage where you have an idea whom you want to shape up into a reality. Helping raise funds through friends, family & even investing your own savings. The range of revenue of company usually varies from No Revenue to 50 Lakhs.


2. Early Revenue- Early revenue is helping seed & venture backed tech founders accelerate B2B sales growth through coaching & proven playbooks. Under this stage funding usually ranges between 50 Lakh to 5 Crores with an expected 5 times return.


3. Start-up Funding- This phase comes when a company has established itself & is earning revenue to the tune of 5 Cr. to 50 Cr. In this phase you get into the real money or funding business where company expects to raise funding in the range of 5Cr.-700 Cr. There are usually 4 types of Growth Funding namely-


· Series A Funding- Series A funding is the first round of funding by a Venture Capitalist firm. Institutional investors like Sequoria, Axel, Matrix, and Kalari deal in India. Series A funding generally ranges between 1-3 Million $ (1-21 Cr.).



· Series B Funding- Series B Funding is second round of funding & ranges between 5-10 Mn$ (36-80 Cr.).



· Series C Funding- Series C Funding is third round of funding & ranges between 10-30 Mn$ (70-200 Cr.)



· Series D Funding- Series D Funding is fourth round of funding & ranges between 30- 100 Mn$ (200-700 Cr.)



Usually, at every stage, valuations keep increasing. It results in increase in size of investment & funding.


5. Upcoming IPO- It takes place when an unlisted company starts thinking about getting an Initial Public Offering (IPO) to raise funds..

 

6. Pre-IPO- Pre IPO, as the name suggests means the process before IPO. It’s the late stage for a private company to raise funds in advance of it’s listing on a public exchange.

 

7. Listed/IPO- An IPO basically means a fundraising method used by large companies, in which the company sells its shares to the public for the first time. Following the IPO, companies shares start trading at IPO. Once companies go public via Initial Public Offer (IPO). For that it gets converted from Pvt. Ltd. to Public Ltd.


8. Stopped Trading- Stopped Trading means when the company stops trading of shares on stick exchange which can be due to various reasons like losses etc.


9. Delisted- Delisting means removal of listed securities of a company from a stock exchange. The delisting of a security can be voluntary or involuntary & is usually due to bankruptcy etc.


10. Liquidation- Liquidation is the process of bringing a business to an end & distributing its assets to the claimants. This event usually occurs when a company is insolvent & can’t play its due obligations



Q. How does Planify help start-ups?



It helps start-ups & entrepreneurs with fundraising by providing seed funding, start-up funding & growth funding through accredited investor. Planify also offers secondary sale of private equity shares of Pre-IPO companies, upcoming IPOs & companies that have stopped trading on exchanges.

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