Need for Funding
1. Prototype creation
2. Product development
3. Team hiring
4. Working capital
5. Legal & Consulting services
6. Raw material & Equipment
7. License & Certifications
8. Marketing & Sales
9. Office space & Admin expenses
Types of funding
1. Equity financing- Ownership
 Angel investors, Self-financing, Family
& Friends, VCs, Incubators
2. Debt financing- Borrowing
 Banks, NBFCs, Govt. loan schemes
Stages of Startup & Associated funding
1. Ideation- Coming with a idea
 Funding- Pre-Seed Stage
Self-financing, Family & friends
2. Validation- Developing a prototype & evaluating its market
 Funding- Seed Stage
Angel investors, Incubators, VCs
3. Early traction- Launched in market
 Funding- Series A Stage
VCs, NBFCs, Banks, Debt financing
4. Scaling- For Expansion
 VCs, Private Equity firms
5. Exit options- Selling, M&A, IPO
 Discounted Cash Flows

𝐷𝐶𝐹 =
( 𝐶𝐹 1
( 1+𝑟 )1 )(
+
𝐶𝐹 2
( 1+𝑟 )2 ) + …+
( 𝐶𝐹 𝑛
( 1+𝑟 )𝑛 )
CF1- Cash flow for year 1
CF2- Cash flow for year 2
CFn- Cash flow for year n
r- The discount rate
 Time value of money, a rupee today is more useful than a rupee later, considering all other factors being the
same, especially in an inflationary environment.

𝑛
𝐹𝑉 𝑡
𝑃𝑉 =∑
𝑡 =0 (1+𝑖)𝑡

- Present Value
- Future Value
i- rate at which the amount will be compounded each period
t- number of time periods

Period
1 2 3
(in yrs)
PV example with cash flow Amoun
100 100 100
t
discount
Year Amount PV
factor
1 100 0.909 90.91
2 100 0.826 82.64
3 100 0.751 75.13

The cumulative PV is 90.91+ 82.64+ 75.13= 248.68