Smart Startup – Smart Up

Chapter 9: Fundraising

A startup idea only becomes a reality

when there are sufficient financial conditions

to be able to implement it.

But if you have enough money to start a business

or have enough savings to start a business

(in case you do not have support from your family),

when can you start a business?

With the inferiority of both age,

experience,

capital…

how will you deploy your startup idea?

In fact, capital is the first

and vital element of a business in the beginning.

Moreover, to start any project,

you need capital.

Many entrepreneurs with a bold idea are stuck

when they do not have the capital to start a business.

Capital plays an important role in all aspects of business.

When you get on the startup boat,

you will definitely have difficulty in capital.

Therefore, choosing the solution to call for capital

– call for investment is an important step to build a successful business.

The following are three capital raising concepts

and also three forms of investment

that are made by startups around the world today.

1. Crowdfunding – Crowdfunding.

The concept of “crowdfunding” is quite common

with startups in many countries around the world,

but a bit new in Vietnam.

This is the first form

and also an extremely interesting form that startups often use

to raise capital.

Usually, this form of fundraising applies to products

that are loved by the community.

The investors

– community contributors

– are also the participants

who will help the project spread more widely in the community,

be known by many people,

and it is likely that the community investors will continue PR

to develop the project.

Usually, small startups,

just starting out or specializing in certain product lines will choose this form of fundraising

with the advantage of reaching a large number of “investors”,

while still not losing their share hundred company owners.

This way of fundraising can also help startups test their product

or idea in the market.

First, crowdfunding usually starts

through the platform of websites

such as Kickstarter, Indiegogo…

or the websites of the callers themselves.

Today, communication channels

through the Internet have opened up

and make reaching the community

– investors

– extremely effective.

As a result, start-ups can easily raise capital via the Internet.

Next, owners of ideas/products share information

to call on the community to invest in the project.

Third, investors will contribute an amount

(from a few million dong to several hundred million dong)

and receive a reward depending on the level of support.

Community investors will receive a reward

that can be a souvenir of the project,

a discount on services or a dinner with the project investor…

With this form,

you will gather a large number of people a large number

of participants in their projects.

They don’t necessarily have to be professional investors,

they simply join the game because they have fun.

With the amount of money is not too much,

everyone can participate.

By using the form of crowdfunding,

project owners benefit

because they do not lose percentages for investors,

do not waste time looking for investors,

but also build a group of potential customers

from those who are already working contribute

or follow the project.

In foreign countries,

this form of crowdfunding is quite popular and developed.

Startups that start with a small project,

a product that people love

and reach out to the community on a large scale

It will gather a large community

with this form of crowdfunding.

2. Angel investor – Angel investor.

Just with the name “Angel Investors”,

you can already imagine what kind of people they are.

Do they have a lot of money?

Correct.

If they have a lot of money,

they will invest in your business.

But they are also an “angel”

when they dare to invest in your business

– a business that may not have clear results

but already has a clear idea and business model.

Angel investors can be organizations,

groups or individuals.

This is really your luck if you meet “angel” investors,

because they are really the “angels” of startups.

Angel investors often aim

to develop the community rather than gain profit,

and that is also the luck of the entrepreneurs.

The biggest advantage of raising capital from “angel” investors

is that they can provide valuable advice

and important business relationships.

Usually, “angel” investors have been business leaders

and they are experienced in the business environment.

Therefore, when you take their capital,

you will always receive their support resources,

knowledge,

and relationships to grow your business.

That is the biggest reason

why startups love the form of calling

for capital from “angel” investors.

The “angel” investors are usually

wealthy demihumans,

have the ability to fund a long-term business,

and often,

in return,

they get partial ownership of the company.

To be fair,

the investments of these “angel” investors carry a high degree

of risk and therefore the return they require is also large.

Remember, what’s important for early-stage startups

when raising capital from angel investors is not just their money,

but their wisdom.

The investment amount of these “angel” investors is also quite large,

but not as much as the wisdom they “pour” into your business.

Speaking of which, have you seen the real benefit of this type of fundraising?

Investments from “angel” investors usually range from a few tens of millions

of dong to a few hundred million dong.

They often invest in projects that have developed

and are able to bring back tens of times their investment

in a short time of 5-7 years.

Take advantage of this investment

to get your business off the ground.

3. Venture capital fund – Venture capital.

Venture capital funds will appear

when your business is growing

and needs a large amount of capital.

What they need from you is prestige

and development in the market.

So think of this way of raising capital

when you already have “something certain” in your industry

and in the market.

The following are the characteristics of raising capital

through a venture capital fund:

– Calling for investment often takes a long time in persuasion and agreement.

This is really the most attractive form of raising capital,

but also the most difficult form of raising capital,

because it requires a lot of conditions

as well as other objective and subjective factors.

Exposure to this form of investment is not easy

and in it there are many mysteries that you need to untangle

and work for a long time to qualify for appraisal and approval.

– Venture capital funds often pour capital into newly established businesses

that have been growing for a while,

but have not been listed on the stock market.

– This form of investment is extremely complicated

because you will have to go through a professional organization/fund

to make and manage investment capital.

You will be under the strict control of the businesses/organizations

that invest in your project,

in return they will pour strong capital into the business

for you to develop.

The investment fund participates in controlling

and assisting in the operation

and development of the company.

Moreover, this operating process is often tight

and there is supervision

of the entire project of the investment company for you.

– This form of investment often pours out capital for you

with a much larger amount than the two ways of calling

for investment mentioned earlier in this chapter.

– The subjects of venture capital investment are mostly high-tech,

advanced,

small and medium-sized companies

that have passed the development stage

and have a solid foundation.

– The last thing to note

when you choose this form of investment is

to have a clear agreement before being poured capital

to avoid unwanted control

and time constraints.

This is really the ideal form of funding

for startups to choose,

but in return you will lose control

or very little control

as your company grows.

Therefore, make a wise choice

to both develop your business

and have your freedom after the business is successful.

In addition to the above investment forms,

you can also call for capital through family,

friends…

and many other forms of calling

for investment capital.

To raise some capital for your business,

it will take you a lot of time because

when someone

or an organization spends money to invest,

they all consider it very carefully,

so it will make you feel stressed by straight.

But don’t be discouraged.

Remember the quote of Che Guevara:

“Happiness is not the feeling of reaching the destination,

but of being on the road.”

Entrepreneurs should consider

when to start raising capital

and what form of funding will be suitable

for their current business model.

Regardless of the form of fundraising you use,

you must learn carefully about the “people who give you money”

and provide the items (if necessary)

so as not to be detrimental to your business later.

In the end,

no matter what,

continue on the path you’ve been on.

Entrepreneurship is the most amazing

and exciting path you will ever take in your life.