Name: Ayush Kapoor En No.

19/14/HM/012
Registration No. 17672

Ans 2. STARTUP CONSTRAINTS IN VALLEY OF DEATH:

Every startup goes through a phase in the startup cycle, called the VALLEY OF DEATH. The valley
of death is the period in the lifecycle of the startup where it has begun operations but has
not started generating revenue. It is the most difficult phase in a start-up’s lifecycle, making
a lot of startups die and hence it is named the valley of death.

The startups which are successful in overcoming the challenge of the valley of death usually
prosper in long term and turn profitable.

The different constraints startups face in the valley of death are:

1. Reliance on existing capital: With little to no revenue, startups have to keep relying to
the already existing funds they have. This makes startups struggle to handle operational
expenses and paying salaries of the employees difficult.
2. Working with the right people: With limited funds and struggling phase of the startup, it
becomes very difficult to obtain the right talent in the market. This makes the startup
very constrained in terms of talent in the industry.
3. Securing financial resources: With little to no revenue, startups find it very difficult to
secure new financial resources to get funded. VCs usually look for startups which are in
the market and gaining popularity.
4. Seeing your idea through prototyping: With limited funds, many startups fail to see
through the prototyping process and give up midway.
5. Managing cashflows: Startups fail to manage cashflows. With so many outflows and very
limited inflows, it becomes very difficult for most startups to phase through the valley of
death.
6. Right mindset: With so many struggles going on, most startups give in to the pressure
and lose the right mindset to make their business prosper.

Ans 4 Various Funding sources available to explore during Startup life-cycle

1. The Pre-seed Funding Stage:

The pre-seed funding stage is commonly known as bootstrapping. In simple terms, it means using
your own existing resources in order to scale your startup. Startup owners invest from their own
pocket and try to grow themselves in the most resourceful manner.

This prime stage of seed funding falls so early that it’s not even considered as a startup funding. The
pre-seed funding stage generally refers to the time period in which a startup is getting their
operations off the ground.

Potential Investors of Pre-Seed Stage

The most common pre-series investors are:

Startup Owners
Friends and Family

Early-Stage Venture Funds (Micro VCs)

2. Seed Funding Stage

After the pre-seeding stage, it’s time to actually plant the seed. The first in the startup funding
stages is “Seed funding”. Almost 29 percent of start-ups fail because they run out of capital while
bootstrapping, which makes seed capital critical to get a business up and running.

The common types of investors who participate in seed funding are:

• Friends and Family

• Angel Investors
• Early-Stage Venture Funds (Micro VCs)
• Crowdfunding

3. Series A Funding Stage

Series A stage is the first round of venture capital financing. By now, the startup must have a
developed product and a customer base with consistent revenue flow. Now it’s time for them to opt
for series A.

Series A funding mostly comes from angel investors and traditional venture capital firms. They are
not looking for “great ideas”, instead, they are looking for startups with a solid business strategy that
can turn their great idea into a successful, money-making organization, allowing the investors to
reap the benefits of their investment.

Potential Investors for Series A

• Accelerators
• Super Angel Investors
• Venture Capitalists

4. Series B Funding Stage

Startups that go through the previous startup funding stages (seed funding and Series A) have
already developed a substantial user base alongside a steady stream of revenue. They have proven
themselves in front of their investors that they are can achieve success at a larger scale.

Potential Investors for Series B

• Venture Capitalists
• Late-stage VCs

5. Series C Funding Stage

To scale your startup significantly, you can acquire different startups with the Series C funding. By
now, your startup operations have become less risky whereas more investors are coming in to play.
Many hedge funds, investment banks, private equity firms etc. will happily invest in your startup
during the Series C stage.

Potential Investors for Series C

• Late-stage VCs
• Private Equity Firms
• Hedge Funds
• Banks

6. Series D Funding Stage and Beyond

Not many startups find a need to go to this stage. The Series D funding stage allows entrepreneurs
to raise funds for a special situation. For instance, a merger and also if it has not yet hit its growth
goal.

Potential Investors for Series D

• Late-stage VCs
• Private Equity Firms
• Hedge Funds
• Banks

7. Initial Public Offering (IPO)

IPO is the process of offering corporate shares to the general public for the first time.

Growing startups that need funding often use this process to generate funds, whereas established
organizations use it to allow startup owners to exit some or all of their ownership by selling the
shares to the general public.

Ans 5 Entrepreneurial motivation & Surrounding environment.

Entrepreneurial motivation is understood the first step in pushing entrepreneurial activities, and
studies on this regard can deepen the information of entrepreneurial aptitude and behavioural
patterns.

The implications of entrepreneurial motivation have formerly been interpreted via way of means of
research from quite a few perspectives. Olson and Bosserman (1984) held that entrepreneurial
motivation encourages those who already are blessed with the fundamental situations for
entrepreneurship and big entrepreneurial talents to begin a business.

Philosophers argued that entrepreneurial motivation is the spark that transforms entrepreneurial
behaviour and ideas, and transform them into real entrepreneurial outcomes. Others highlighted
that entrepreneurial motivation is an entrepreneur’s ability to recognise the proposed enterprise’s
goals and vision, and determines the course of action and scale of organisational development.

Education and experience – Education plays an important role in entrepreneurial mindset. Although
it cannot be said that education is mandatory, but education brings enhanced level of awareness,
and gives knowledge of activities such as market research, feasibility test, pilot testing, budgeting, as
well as connecting with necessary bodies that assist us throughout the process, such as financial help
and incubation.

Political environment – A political environment has affects on entrepreneurship. If the government

system is of communism or socialism, then entrepreneurship shall be severely affected. Even
countries like China are not totally followers of pure communism or socialism, as in longer run, they
have understood the value of entrepreneurship and innovation. While an open and free economy,
such as India, in which government offers supervisory, advisory and financial support, the
entrepreneurship is promoted. Henceforth we have so many initiatives, and prominent of them is
Atal incubation mission.

Social environment – Social environment means society, to which an individual belongs to. This has
been a particular limitation with Indian environment. Due to excessive implementation of socialist
policies, the people from country became more reliant on government jobs and opportunities, and
transformed the country in to job seeker rathe than job creator. Which led to massive
underutilization of human resources in this country. However, the incumbent government from
2014 onwards have promoted entrepreneurship, and have gradually changed the outlook, by
working on micro level i.e. family level, where entrepreneurship is regarded as a viable economic
activity.

Financial Support – An entrepreneur needs financial support, from both government as well as
private individuals. Due to favourable political and economic circumstances, India is blessed with
various sources of financial resources. For example, we have sovereign wealth funds, direct
government and public finds. Then we have hybrid model of government working with venture
capitalists, as well as angel investors. And then we have private bodies such as angel investors
network, as well as VC.

Non-financial support – Supervisory support such as incubation and related assistance is highly
desirable. Hence, government has established incubation centres all over country, apart from
thinktanks and creative workspaces, such as Atal Tinkering labs.