Startup founders often ask me about how to best fund their new venture. There is no single answer.
Every company is different.
Every technology is different.
Every period in time is different.
Every management team is different.
For these reasons, and more, there are many ways to fund a startup.
However, for illustration purposes, let's walk through a hypothetical startup funding. Let me share Anna Vital's infographic and blog article. She provides a good basic example of funding a startup - A Hypothetical Startup.
First, let’s figure out why we are talking about funding as something you need to do. This is not a given. The opposite of funding is “bootstrapping,” the process of funding a startup through your own savings. There are a few companies that bootstrapped for a while until taking investment, like MailChimp and AirBnB.
If you know the basics of how funding works, skip to the end. In this article I am giving the easiest to understand explanation of the process. Let’s start with the basics.
Every time you get funding, you give up a piece of your company. The more funding you get, the more company you give up. That ‘piece of company’ is ‘equity.’ Everyone you give it to ...
