Flashcards on Startup Funding: Bootstrapping to IPO
Startup Funding: Bootstrapping to IPO - A Student's Guide
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Startup funding
52 cards
Card 1
Question: What defines a 'venture backed' startup?
Answer: A startup that receives venture capital funding (seed or growth stage) and is expected to show very high growth potential and strong execution capabil
Card 2
Question: Name five common funding options available to startups (excluding bootstrapping).
Answer: Friends & family; Grants & competitions; Crowdfunding; Angel investors; Venture capital (also venture debt, convertibles, bank loans).
Card 3
Question: What is venture debt and why might a startup use it?
Answer: A loan designed for early-stage, high-growth companies that provides debt capital to avoid diluting founders' ownership; it must be repaid over time.
Card 4
Question: How do convertibles (e.g., SAFEs) function as a funding option?
Answer: They let startups raise capital without immediately setting a valuation by deferring equity conversion until a later priced round or trigger event.
Card 5
Question: What are the main trade-offs of taking venture capital?
Answer: VC provides significant capital and strategic resources but requires giving up equity (dilution) and investor stakes in the company.
Card 6
Question: What are the advantages and limitations of grants and competitions for startups?
Answer: Advantages: non-dilutive funding (no repayment or equity). Limitations: highly competitive and often limited in amount.
Card 7
Question: How can crowdfunding be useful for startups and what does it require?
Answer: Crowdfunding raises small amounts from many people and can double as a marketing tool, but it requires substantial effort to run a successful campaign
Card 8
Question: What role do angel investors play for startups?
Answer: High-net-worth individuals who provide capital in exchange for equity or convertible debt, often bringing expertise and networks.
Card 9
Question: When are bank loans appropriate for startups and what's a key downside?
Answer: Bank loans provide traditional debt that must be repaid with interest and may need collateral; they do not dilute equity but impose repayment obligati
Card 10
Question: Which funding sources are typical at the pre-seed (idea/POC) stage?
Answer: Self/friends & family (SFF), grants, incubators, and crowdfunding.