Fund-raising has never been an easy task. However, many entrepreneurs rely on the possibility of attracting venture or angel financing at the very early stage to get the projects off the ground. But is that a realistic assumption to be put into a business plan? What is the likelihood of conducting the first two or three years of coding (for tech start-ups) or R&D (for any other innovative projects) at the investors cost? Let's outline typical stages in a successful company's financing. We'll start with the first and finish with the last. Although there are rare exceptions to this sequence, in most cases it looks like this.
1. Seed Round.
This is the starting point of any business: you only have your idea and the first rough profitability estimations. Every entrepreneur at this stage recognizes the Idea as his/her top value asset. And this is natural as the Idea will be providing the guiding light and most of the motivation before actual sales take place. Every book of Entrepreneurship advises you to think big at this stage. Even if all you do is opening a bakery at the corner, you should be aiming at changing this world for good. But it usually takes a year or two of hard work and bitter frustration before there is something at your disposal that can be sold. And chances are that the world will disapprove your Big Idea and youll have to start it all over.
So what kind of investment are you possibly able to attract at this stage? The answer is the "3Fs", otherwise known as Family, Friends, and Fools. You should be prepared to invest your own capital (including the money you make with your day job) and search for business partners among the people you know. If you are lucky, you will