Know Your Tech Startup
What does a tech startup mean?
This is a type of company aiming to use technologies to provide innovations in products and services, working normally in a business model that generates scalable growth.
What is it that makes one a startup or not?
Typically, most startups are created to grow significantly and scale while traditional businesses value steady, gradual growth.
Tech startups make their revenue through
Through revenue models like subscription, licensing, freemium offers, advertising, or direct sales.
What are the most common issues faced by a tech startup?
The main challenges include funding, market competition, product development, and customer acquisition.
What are the lifecycle stages of a tech startup?
Idea stage, validation stage, early traction, growth stage, and scaling.
Funding Fundamentals
What are the main funding sources for a tech startup?
Bootstrapping, angel investors, venture capital (VC), crowdfunding, loans, and grants.
What is bootstrapping?
Self-funding a business using personal savings, reinvested profits, or support from family and friends.
Who are angel investors?
Wealthy individuals who provide capital to startups in exchange for equity or convertible debt.
What is venture capital?
Institutional funding provided by professional investors in exchange for equity, focusing on high-growth startups.
What is equity funding?
Raising money by selling shares of ownership in your company to investors.
Alternative Funding Options
What is crowdfunding?
Funding from a high number of individuals through platforms like Kickstarter, Indiegogo, or equity crowdfunding sites.
What are startup accelerators?
Providing funding, mentorship, and other resources in exchange for equity, often part of a program.
What are government grants for startups?
Non-repayable funds issued by governments for innovation and growth.
Can bank loans be used for funding in tech startups?
Yes, although this is not as frequent due to the high risk and no collateral involved in startups.
What is revenue-based financing?
A loan model that repayment depends on the performance of the startup’s revenues.
Investor Relations
What do investors want in a tech startup?
Scalable business model, good founding team, big market size, and a unique value proposition.
What is a pitch deck, and why is it important?
Presentation summarizing the business plan of a startup for attracting investors.
What is due diligence in financing a startup?
Process of investigation by investors into the financials, market position and operations of a startup before one makes an investment.
What is a term sheet?
Non-binding agreement summarizing the terms and conditions of a proposed investment.
How much equity should a startup give up in early funding rounds?
10 to 25%. According to conditions of valuation and funding needs.
Growth and Scalability
What does Series A financing refer to?
Scaling the business, and adjusting its product-market fit.
How are startups valued?
Revenue, potential markets, competitive field, and future prospects of growth.
How do incubators support startups?
Provide resources and mentorship sometimes, even with an office location.
What does SAFE and a convertible note stand for?
Methods in which startups receive financing without direct equity dilution.
What are some exit strategies for tech startups?
Common exit strategies are acquisitions, merger, going public by issuing an initial public offering (IPO), and private equity buyout.
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