Startups and Unicorns in India
How Startups Are Funded
Startups raise money in stages, from friends and angel investors to venture capital funds, trading ownership for cash.
Money arrives in rounds.
Early money
Founders often start with savings or money from friends and family.
Angels and seed
Angel investors are wealthy individuals who fund very early ideas. Seed rounds fund initial product and hiring.
Venture rounds
Series A, B and later rounds are led by venture capital funds, each at a higher valuation if the firm is doing well.
Dilution
Each round gives investors ownership, so founders own a smaller share, though of a bigger pie.
A founder sells 20 per cent of the company for a sum of money that lets her hire engineers.
It is investment, not profit.
- Startups raise money in rounds.
- Angels fund early ideas.
- VCs lead larger rounds.
- Founders' share gets diluted.
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