Step by Step Guide for Start-up Financial Capital Raising Process

There are three stages in capital raising for hedge funds. The first stage is known as Pre-seed stag. Well in this stage you come up with a business venture idea worth investing in, and you gain investment by any means. Also in this stage you can also increase the attention of a wealthy individual who would be willing to invest in your idea. These are known as angel investors and are rare to find. Other options for getting cash are self-financing or with the help of friends and family. The process of loaning is discouraged when it comes to gaining capital for investment because in case the project fails, you are left with nothing and got the debt to pay. It is always wise to think of all possibilities and outcomes.

Stage number 2 is the Seed stage. This stage takes place when you have proven your worth, and now you must put your prototype in action. When you make investors believe that your idea will indeed turn over a profit, you will gain more investment so that your production lines now start generating the product.

After the seed phase that is commonly referred to as “Series A,” followed by “Series B,” “Series C,” etc. To support the company growth, these are funding stages. This is a risk-free stage because at this point the product will be in manufacturing, and you will start earning. Now the investments you get will be paid faster than they are asked for. It is entirely set with lower interest and equity as in this stage funding the inventory is the only expense you have to bear while the production line keeps generating revenue.

Commonly made mistakes:

1) Do not be hasty in raising money for your startup. Just think of your product whether is it revolutionary, or will it be a flop? Is it leaving you a failure and in debt?

2) Do not waste your time on gaining investors on websites with a less audience. Always choose a website where investors are present.

3) Make sure to calculate earning to expenditure regularly, and you don’t want to find out you have been going in a loss when it’s too late.

Conclusion:

Raising money for your startup is a risky but rewarding business process. Just make sure to follow the provided guidelines and research further so that you get the best out of your efforts.