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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.

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How Startup Funding Works

shared by Ariela on Jul 08, 2013 in Business

How Startup Funding Works

shared by Ariela on Jul 08, 2013 in Business

18,182 views

81 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: 40 of 27445 in Business

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