- What’s the right time to raise funds?
The best time to raise capital for a start-up is when you have a clear idea of what you want to do and a clear idea of how much money you need to get to a milestone that will set a higher value for your company. In general, it’s better to bootstrap and do funding from friends and family as long as you can, because the more mature and successful you are the better deal you will get from angels or VCs. The longer you bootstrap the more of the company you will retain. You also need to consider an exit plan before talking with investors as they will want to know how they will get their money back.
Generally speaking, you want to raise money right after you have done something that increases the value of your company and gives people a sense that ‘the train is leaving the station‘.
- What’s up with the dilution
Valuation and dilution are two intricately linked fundamental truths that all founders need to be aware of. Since your valuation will determine your dilution down the line, the universal goal for any founder is to maximize valuation while minimizing dilution.
Figuring out how much that is, of course, is the hard part. If you raise too much, you could give away an unduly large portion of your company. If you raise too little, you risk running out of cash before you achieve the milestones needed to go back to investors again.
So how should you go about it? Start with some good forecasting, do a fair amount of math, and get help on cutting through the legalese. The level of dilution could be derived after analyzing factors like comparable company analysis, capital needs, market opportunity, and last but not least looking beyond traditional valuation models.
- Setting up a budget to hire Professional Firm
Professional Agencies are an essential factor for start-up success. Professional agencies come into play at two stages in the life of a start-up. Involving a professional agency Bhaskara Consulting Group (‘BCG’) while drafting agreements, contracts and deeds helps start-ups immensely to navigate through the technicalities of various contracts. Engaging BCG ensures that none of the parties are at loss.
Now involving a professional firm like BCG becomes essential when you have substantially grown the business but are struggling to improve your bottom lines. BCG can help you save money and time making financial decisions, preparing Valuation reports, and any other tasks related to your start-up. BCG always has updated strategies up its sleeves which helps to achieve your goals faster.
Disclaimer: This article is for the purpose of general awareness and does not represent the professional opinion of the author.
For any queries/clarifications/comments, please reach us at info.bhaskaragroup@gmail.com.
Author:
CA Hitarth Sheth (CA at BCG) & Tanmay Ambekar (CA Intern at BCG)