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How Startup Funding Works

HOW STARTUP FUNDING WORKS BY ANNA VITAL



A HYPOTHETICAL STARTUP GOES FROM IDEA TO IPO



IPO (Initial Public Offering)



how much you get it



money raised

$235,000,000

$2,000,000

$200,000

$15,000



at $2.6 billion valuation



100% OF NOTHING IS A LOT LESS THAN 17% OF A BIG COMPANY...



at $4 million valuation SERIES A



at $1 million valuation SEED ROUND



FAMILY AND FRIENDS



some more series of funding



SPLITTING THE PIE



what you give



founder 100%



founder 1 50%

founder 2 50%



founder 1 37.5%

founder 2 37.5%

option pool 20%

uncle 5%



option pool?

Stock set aside for future employees.



founder 1 31.2%

founder 2 31.2%

angel 16.7%

option pool 16.7%

uncle 4.2%



founder 1 19.2%

founder 2 19.2%

VC 33.3%

first employee 1.8%

angel 10.3%

option pool 13.5%

uncle 2.6%



founder 1 17.6%

founder 2 17.6%

public 8.3%

VC 30.5%

first employee 1.7%

angel 9.5%

option pool 12.45%

uncle 2.4%



what everyone does



YOU

start the company.



CO-FOUNDER

does half of the work.



FRIENDS AND FAMILY

invests before anyone else at the lowest price.



ANGEL INVESTORS

has at least $1,000,000 or $200,000 annually - is an accredited investor. Invests her own money.



VENTURE CAPITALISTS

persuades other people to put money in his fund. Invests that money, starting at $500,000.



EARLY EMPLOYEES

gambles on your company by accepting low salary plus some stock.



INVESTMENT BANKERS

does IPO paperwork and sells a lot of your stock, getsing 7% of the whole IPO for it.



ANYONE

after your company does the IPO, anyone in the world can become your investor.

How Startup Funding Works

shared by Ariela on Jul 09, 2013 in Business

How Startup Funding Works

shared by Ariela on Jul 09, 2013 in Business

16K views

79 faves

6 comments

A hypothetical startup will get about $15,000 from family and friends, about $200,000 from an angel investor three months later, and about $2 Million from a VC another six months later. If all goes we...
Rank: 37 of 16679 in Business

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