Most healthy businesses need business financing at
some point. Startups have to deal with starting costs and ongoing businesses
have to finance growth and working capital.
Financing options depend on what kind of business. Its
age, position, performance, market opportunities, team, and so forth are very
important. So, entrepreneurs should tailor their funding search and don’t waste
their time looking for the wrong kind of financing.
The outlook for funding depends a great deal on the
specifics of the business. For example, many ongoing businesses have access to
standard business loans from a traditional bank that would not be available to
startups. Also, high-tech high-growth startups have access to investment
funding that would not be available to stable, established businesses that show
only slow growth.
Before getting into the options for startups investments,
let's start with defining the most important definitions.
The process of looking for money must match the needs
of the company. Where you look for money, and how you look for money, depends
on your company and the kind of money you need.
There is an enormous difference, for example, between
a high-growth internet-related company looking for second-round venture funding
and a local retail store looking to finance a second location [2].
A startup is traditionally defined as
a newly established private company (5 - 10 years
old), that is designed
to scale very quickly [3].
A startup is a young company founded by one or more
entrepreneurs in order to develop a unique product or service and bring it to
market.
By its nature, the typical startup tends to be a
shoestring operation, with initial funding from the founders or their families
[4].
Key takeaways are as follows:
·
A startup is an
entrepreneurial venture in search of enough financial backing to get off the
ground.
·
The first
challenge for a startup is to prove the validity of the concept to potential
lenders and investors.
·
Startups are
always risky propositions, but potential investors have several approaches to
determining their value.
In the early stages, startup companies have little or
no revenue coming in. They have an idea, and they must develop it, test it, and
market it. That takes considerable money, and startup owners have several
potential sources to tap.
·
Traditional
funding sources include small business loans from banks or credit unions,
government-sponsored Small
Business Administration
loans from local banks, and grants made by nonprofit organizations and state
governments.
·
So-called incubators, often associated with business schools and other
nonprofits, provide mentoring, office space, and seed funding to startups.
·
Venture
capitalists and angel investors actively seek out promising startups to
bankroll in return for a stake in the company once it gets off the ground.
One of the startup's first tasks is raising a
substantial amount of money to further develop the product. In order to do
that, they must make a strong argument, if not a prototype, that supports their
claim that their idea is truly new or better than anything else on the market.
Most startups kick off as very small operations while
they develop their initial idea, and then seek additional funding from venture
capitalists and angel investors as they build out their businesses.
If consider a startup like TRS the most its idea on
the Figure 1.1.
Problems worth solving Solution of TRS start-up
How do people who are
deaf, hard of hearing, deafblind, or have a speech disorder communicate
with standard telephone users, with no help of neighbors using advanced?
technology or assistive device?
|
Telecommunication relay
service (with accessories) allows people who are deaf, hard of hearing,
deafblind, or have a speech disorder to place calls to standard telephone
users via a keyboard or assistive device
|
The
major problem of telecommunication relay service reports is competitors’
analysis, attributes to the market, current trends and the miscellaneous
elements which provides additional details.
Another factor is high cost of equipment to provide
these services reduces the number of commercial consumers and only those
capable of accessing these services equipment is few as compared to the
targeted number of expected consumers.
Lack of awareness of this technological in different
regions and efficiency maintenance of the devices contributes in the stagnating
and hinders the growth of global telecommunication relay service market.
Some regions globally lack awareness of these services
despite the fact that they cannot even get these gadgets they cannot afford.
But the Features are as follows:
·
Save conversation.
·
Choose language
preference (English, Ukrainian, Russia).
·
Ability to make
Ukrainian or Russia language relay calls.
·
Ability to manage
typing transmission speed.
·
Ability to receive
Text Mail when you are not available to answer IP Relay call.
·
Live online chat
with Customer Service.
·
Make 911 emergency
calls.
Depending
on the technical and physical abilities and physical environments of users,
different call types are possible via relay services.
TTY to voice/voice to TTY, Voice carries over, Hearing
carry over, Speech To Speech, Deaf blind variation, Captioned telephone,
IP CTS,
Two-line captioned telephone, Web-based captioned telephone, Other variations,
IP relay service or Web-based texts relay services, Video relay service, Video
remote interpreting
This includes people who are not members of the
original intended user group, who are deaf, hard of hearing, or speech impaired.
Some such users have noted its usefulness in making long-distance or local
calls free of charge and without a telephone.
Leaders in the deaf community defend this decision and
generally retain strong support among service users with hearing and speech
disabilities.
In July 2007, the Federal Communications
Commission ruled that the 711-requirement extended
to VOIP telephony.
Fraudulent calls of both types have been cited as
reasons for further relay regulation, and as causes for long hold times that
must be endured by many legitimate users.
Most businesses legally cannot have relay
calls blocked due to the need for legitimate users to be
accommodated, although businesses that are repeatedly victimized by pranks
and/or scams often stop trusting relay calls or hang up on them because it is
difficult to distinguish legitimate users from illegitimate ones; this is
another way that the abusers of the service ultimately victimize the legitimate
users, in addition to tying up the service from them.
Investing in startups
are essentially buying a piece of the company. They are putting down capital,
in exchange for equity:
a portion of ownership in the startup and rights to its potential future
profits.
By doing so, investors
are forming a partnership with the startups they choose to invest in – if the
company turns a profit, investors make returns proportionate to their amount of
equity in the startup; if the startup fails, the investors lose the money
they’ve invested.
Startup investors make
a profit from their investments when they sell part or all of their portion of
ownership in the company during a liquidity
event such as an IPO or acquisition.
Liquidity refers to how easy it is
to convert a security
(something that you own with economic value) into cash money.
Liquidity event is an
opportunity to turn money that is tied up in equity into cold, hard cash. A
common example is an IPO
(Initial Public Offering) – the first sale of stock by private companies to the
public – often referred to as “going public”.),
An asset is a piece of property with
economic value, owned by an individual, a corporation, or the government, and
expected to provide future benefit to the owner.
Assets commonly
generate future cash flow, reduce expenses, or improve sales. Assets are
divided into asset classes
– groups of securities (ownership rights) that exhibit shared characteristics,
behave similarly in the marketplace, and are governed by the same laws and
regulations.
Startup equity, for
example, is regarded as a high-risk, high-reward, highly illiquid asset class.
This means that
investing in startup equity is very risky, because many startups fail to return
investors’ money, and startup equity is relatively more difficult to sell
before the company IPO's. However, this increased risk and illiquidity is
coupled with the potential for a very large return if the startup succeeds.
Some startups will
allow investors to sell their shares of stock in the company before the IPO;
referred to as a secondary sale of
stock.
However, many startups
will issue a right of first refusal,
which requires investors who want to unload stock before a company goes public
to first offer to sell it back to the startup or its early investors (called a
tender offer).
Most startups also put
restrictions on the secondary sale of common stock, or stock held by founders
and employees.
Two pragmatic approaches can be selected for the
investment and these approaches include “Partner with” and “Procure from” the
similar entities and startups.
The financing system for the services will induce
fragmenting impact on demonstration of provision of sigh relay services. The
Federal Communication Commission (FCC) is providing funds for the innovative
startup in the telecommunication.
These funds can be utilized to provide efficient
services to the users. The possible impact of the services and funds will be on
the profitable services for VRS providers and the pure process is based on the
time-based changes.
The effect is profitable for the VRS providers and it
will provide equipment to the users. Through making the process more
complicated it becomes impossible to reach the required goals therefore proper
investment is required to maintain the process.
Federal communication commission FCC is providing
enough funds to bring reforms and innovation in the startup. FCC is further
struggling to make correct services for the customers with reduced negative
side effect and financing system.
Some of the new regulations are required for the VRS
providers and it make possible to improve the services.
It is often believed that Telecom operators are
required to be exposed with the improved capability is towards the third
parties. This exposure to the third party can integrate them into product
portfolio and the service providers of the current age.
Majority of engagement in the business startups are
centered on the creating product, developing innovation in the product,
customer experience driven by sales and marketing, and services.