Start Up

Question 1

Condition that need to become a start up

Answer 1

1) upto a period of 10 year form date of incorporation

2) turnover less than 100 cores rupees

3) innovation, development and improvement

Question 2

Differences between a start-up and entrepreneurship

Answer 2

1)Startup is part of entrepreneurship. Entrepreneurship is broader concept

2) aim of startup: conceptualize the idea which it has developed.

Entrepreneur objective:entrepreneurship concern is to attain opportunities.

3:Startup does not have major financial motive whereas established entrepreneurship concern operates on financial motive.

Question 3

Priorities and Challenges which start-ups in India are facing

Answer 3

The priority is on bringing more and more smaller firms into existence. So, the focus is on need based instead of opportunity based entrepreneurship.

Main challenge with the startup firms is getting the right talent. Further, startups had to comply with numerous regulations which escalate its cost

Question 4

Some of the methods in which a startup firm can bootstrap

Answer 4

a. Trade Credit b. Factoring c. Leasing

Question 5

Angel Investors

Answer 5

 Angel investors invest in small startups.

 The capital angel investors provide may be a one-time investment.

 Angel investors provide more favorable terms compared to other lenders.

 Angel investors are also called informal investors, angel funders, private investors, seed investors or business angels.

 Angel investors typically use their own money.

Question 6

Method used in venture capital financing

Answer 6

Equity financing

Conditional loan

Income note

Participating debenture

Question 7

Advantages of bringing Venture Capital in the company.

Answer 7

 It injects long-term equity finance.

 Venture capitalist is a business partner, sharing both the risks and rewards.

 Venture capitalist provide practical advice and assistance to the company.

 Venture capitalist also has a network of contacts

 Venture capitalist may be capable of providing additional funding.

 They can also facilitate a trade sale

Question 8

Basic characteristics of Venture Capital Financing: or

Vc is a unique way of funding startup

Answer 8

a. Long time horizon

b. Lack of liquidity

c. High Risk

d. Equity Participation

Question 9

Stages of funding for Venture Capital:

Answer 9

a. Seed Money: Low level financing.

b. Start-up: Early stage funding for expenses.

c. First-Round: Early sales and manufacturing funds.

d. Second-Round: Working capital.

e. Third Round: Also called Mezzanine financing, this is expansion money.

f. Fourth-Round: Also called bridge financing, to finance the “going public” process.

Question 10

Structure of Venture Capital Fund in India

Answer 10

a. Domestic Funds

b. Offshore Funds:
 Offshore structure  Unified Structure

Question 11

Sources for funding a Start-up

Answer 11

a. Personal financing

b. Personal credit lines

c. Family and friends

d. Peer-to-peer lending

e. Crowd funding

f. Microloans

g. Vendor financing

h. Purchase order financing

i. Factoring accounts receivables

Question 12

Pitch Presentation in context of Start-up Business

Answer 12

 Pitch deck presentation is a short and brief presentation (not more than 20 minutes) to investors explaining about the prospects of the company and why they should invest into the startup business.

 Pitch presentation can be made during face to face meetings or online meetings.

 Methods on how to approach a pitch presentation:

a. Introduction
b. Team
c. Problem
d. Solution
e. Marketing/Sales
f. Projections or Milestones
g. Competition
h. Business Model
i. Financing