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Topic : Self Financing for your Startup....
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Startup World

 
Created by : Veena Gupta, Analyst, Blackstone Group  | 10 08 2010 10:56:34 +0000
Industry : Hedge Funds/VCs/Private EquityFunctional Area : Getting Started(Entrepreneurship)
Activity:  298 views;  last activity : 10 09 2010 19:04:11 +0000

Once you have decided on the type of venture you want to start, the next step on the road to business success is figuring out where the money will come from to fund it. Where do you start? Is self financing the best way to go for your startup??
Then why people go for VC funding? Which is best Self financing or Go for VC funding?? Share your views on this...

 
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Go for self financing Vs Go for VC funding
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I think the best place to begin is by looking in the mirror. Self-financing is the number-one form of financing used by most business startups. In addition, when you approach other financing sources such as bankers, venture capitalists or the government, they will want to know exactly how much of your own money you are putting into the venture. After all, if you don't have enough faith in your business to risk your own money, why should anyone else risk theirs?


By Veena Gupta, Analyst, Blackstone Group  10 08 2010 10:56:34 +0000
 
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One should go for VC funding where there is a genuine need for such funding.  A project that can run of self financing can be taken up so, provided however that the entrepreneur can fund the project himself.  Not all projects can be self financed and in many cases, debt financing is also not a viable option.

Suppose I have a project which can reach a significant percentage of the world's population.  Who will I go to than a venture capitalist?  The nature of the project is such that there is a very large first mover advantage and therefore, any investment plan has to be with a global reach right at the beginning.  

It is good to participate in such debates.  I prepare project reports and help in appraisal too.  It is like giving birth to a baby.  We can not apply a uniform formula here.  Each component of project has to be analised separately and proposed.  

I have come across very uncomfortable situations where the modern day MBAs try to apply such uniform formula across a wide cross section of project proposals.  My observation is that it will not work satisfactorily.  


By SR Sham Sunder, CEO/MD/Director Technoaid  10 08 2010 11:31:36 +0000
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Yes Veena self financing is the best option since the start up is always taken double care off. In case of VC funding somebody will be serious but not to the full extent since most of the funds belongs to somebody else.


By Rathin Deb, Freelance Retail Consultant  | 10 09 2010 19:04:10 +0000
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Hello Veena, It is better to go for self financing for your immediate requirement. Further it also depends the kind of business you start. In any case if you can able to manage the funds and business well, certainly you will make profit in no time. After establishing your business you can always go for expansion with bank finance and VC funding.

K Rajagoopalan. 


By k Rajagopalan, Area Manager, Amitex Polymers (P) Ltd.  | 10 09 2010 17:56:33 +0000
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In todays world, when the economy across the world is in shambles, Investing is a good way to revive the economy. Why play with others' money when you can afford to invest a small amount to start your own business?
By Siddhartha Shanker, Freelancer  | 10 09 2010 11:34:22 +0000
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Initially for startup self financing is the time tested success formula .


By kasturirangan.r , INSURANCE ADVISOR, Life Insurance Corporation Of India  | 10 08 2010 15:19:52 +0000
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Self finance is the simple way for any startup. Own money is the best solution for inexperienced too. After that partnership or joint venture will be the solution for financing. VC funding usually good for experienced players(depends on promoters) & big business units.


By Vipin Bhasin, Private Equity/Hedge Fund/VC-Manager, Indian Investment Co.  | 10 08 2010 13:48:43 +0000
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sir a startup is never a global bang (exceptions) u always have to start somewhere , VC's are ok for bright business plan but how many get throw at the end of the day?? There is a reason why india is ranked 76th most difficult place to start a business .


By Sarabjeet Singh Johar, BMS student, Mumbai University  | 10 08 2010 12:03:28 +0000
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true , when u start a business u'll need time to establish itself , maybe 3-4 years u can be in recovery mode and on that u see the interest pilling upon you it acts like a death trap


By Sarabjeet Singh Johar, BMS student, Mumbai University  | 10 08 2010 11:10:51 +0000
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it depends on the nature of investments and risk potentionals

Thumb rule is higher risk = big investments = higer returns

In this case VC funding is best

For small scale setup Owned capital is Best than the borrowed capital

 


By ABHIJIT KULKARNI, Project Manager, BNP Paribas  | 10 09 2010 13:29:05 +0000
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It all  depends upon the outlay of your venture or project and the fund mobilising capabilities.


By s.baalu , Consultant, XYZ LTD  | 10 09 2010 12:07:44 +0000
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How much can you self-finance? An experiencedVC is the right way for a start-up.


By John Jacob, Consultant, confidential  | 10 08 2010 11:55:03 +0000
 
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