A successful startup must aim to solve problems for its clients
Funding for startups depends on the project, capital need and founders’ capability to boot strap or raise market funds and of course the firm's business model
If a startup is in tech, specialised services or digital space, the investors would like to place their bets on qualified premium professionals-driven enterprise. The VC's believe the chance of success is more when highly educated and professionally skilled folks drive an enterprise
Q. There are several instances of startups facing cut in valuations. Does reduction in valuation impact overall performance of a startup? - Pratap, Hyderabad
A. Valuation of a startup primarily serves two purposes – either to offer private equity participation to venture capitalists or to exit the startup for a price. I believe while incrementing one's valuation is one of the goals for a startup but should not the only one. A successful startup must aim at being useful to solve problems for its clients.
Q. What is the ideal time to raise funds for a startup? Will fund raising in early stages adversely impact the growth of the startup in longer run? - Surender, Bengaluru
A. It's 'to each their own'. Funding for startups depends on the project, capital need and founders’ capability to boot strap or raise market funds and of course, the firm's business model.
There is no right or wrong time to bring in funds into an enterprise. However, loading your business with more funds than required can boost or bust an enterprise, as it leads to lot of cash burn and eventually lead to liability. If well spent, large fund availability can give speed to the growth strategy.
Q. Some say that startups founded by IITians can raise funds easily. Is there any such bias in venture capital firms? - Kranthi Kumar, Hyderabad’
A I wouldn't call it bias; it is 'investor caution'. Especially if the startup is in tech, specialised services or digital space, the investors would like to place their bets on qualified premium professionals-driven enterprise. The venture capitalists (VCs) believe the chance of success is more when highly educated and professionally skilled folks drive an enterprise.
