Example Of Entrepreneur Startup Essay

Type of paper: Essay

Topic: Project, Founder, Idea, Venture, Angel, Capital, Investor, Application

Pages: 3

Words: 825

Published: 2020/09/09

The basement of a new startup consists of a good innovative idea and professional team. Undoubtedly, the start-up idea cannot be implemented without money. IT start-up requires the same investments as other projects. The difference is that it may exist independently at the first stages of development. The project leaders try to acquire the comprehensive vision of startup investment especially when they work on the mobile application.
The founders have to give up part of the company when a startup gets investment. The more money project gets, the less share is for authors. In this case, the value of the founder share increases. The project funding may differ depending on the stage of project development. Therefore the founders should take into account the investment beginning from the stages of idea to the final step of IPO. Thus the right investor share at every stage becomes a really important factor.
At the stage of fresh idea author of the idea initially owns 100% of the company, he is only one owner. The founder inevitably have to involve other professionals and form a team when work on the project started. You can hire the right people, as employees, but it often happens when at the first stage resources are limited. In such cases, often the founder offers first employees of the company to become co-sponsors. These employees may get the part of company in exchange. The founder may face the key how to share. On the one hand the founder is the owner of startup idea. On the other hand co-founders will do the half of work, their contribution to the company is 50%, the launch of the project cannot take place without them and they also bear huge risks. True partnership is based on respect. Respect is based on justice. Anything less than justice is considered to fall apart in the end. In such cases it is better to give 50% to the co-sponsors.
It is necessary to look for funding before the project start. The founder has to make the final working product to go to the venture investor. There are other ways of investment: loans or investments from family and friends. In the latter case, you can give 5% of the company's to get "friendly" investment. The all shares of co-founders are indicated in documents during the company registration.
It is also recommended to leave 20% for future employees, soon this will be useful in communication with investors, as well as this "insurance" for co-founder to solve the controversial decisions.
You need to look for new sources of funding when it shouldn’t be telling about venture capital investment and the cost of the project creating grows up. There are two kinds of investments.
Business incubator project will provide with not only workspace and mentors, but also investments from $ 10 000 to $ 25 000, which corresponds to 5.10% of the company.
Business angels can give more money, but their share in the startup will be significant. For example, the company was valued at $ 1 million. And business angel agrees to invest $ 200,000, but that does not mean that its share is 20%. Following his investments monetary evaluation of the project is $ 1.2 million. Thus the investment should be divided after the monetary valuation of investments $ 200,000 / $ 1,200,000 = 1/6 = 16.7%. Therefore business angel receives 16.7% of the company, or 1/6. As a result, the author of the idea and the first employees may lose the control of the company, so you need to have investment, when it is really necessary.
When a project has a working version and first users, the further development requires investment from venture capital funds. Their investments should be from $ 500 000. The calculation of the venture investor share is the same as a business angel.
And this is just the first round, then it may be the second and third. However, any of the three stages can not happen. For example, the project did not have enough funds for development and no one wants to invest. Or vice versa, the company will receive enough funds for development to build business processes and make a profit, a larger company may buy it, or it may arrive at the new level IPO.
There are two main reasons. Technically IPO - is an easy way to collect money. Due to the IPO, the company can immediately sell a lot of stock in the stock market and anyone can buy them. The business owner does not need to individually turn to investors and ask for money. In addition, all co-founders and investors after the IPO will be able to convert or sell their shares, respectively, to increase its stake or to get cash. IPO - is a liquidity event, when shares in the company are easily converted into cash.


Taking into account different ways of investment startup team is able to make the final product for application store. They have to conduct the experiment before market penetration to prove “viability” of project. There many ways to carry out experiment. Thus startup doesn’t need any investments at this stage. The main circumstance is a good team. After these steps the startup might get lucky. In this case founder will need investments. Exactly venture capital investments should be taken into account. But it doesn’t mean that you should not pay attention to grants or other programs. Otherwise, if your business proposes a good product and has unexpected success in the application store you may earn money due to good monetization strategy or donation.


Identify startup applications. (All Windows). (2003, June 1). Australian PC World.
Osnabrugge, M., & Robinson, R. (2000). Angel investing: Matching startup funds with startup companies: The guide for entrepreneurs, individual investors, and venture capitalists. San Francisco: Jossey-Bass.
Pace, N. (2008). Put your money where your heart is: Investment strategies for lifetime wealth. New York: Vanguard Press.

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Example Of Entrepreneur Startup Essay. Free Essay Examples - WePapers.com. https://www.wepapers.com/samples/example-of-entrepreneur-startup-essay/. Published Sep 09, 2020. Accessed February 02, 2023.

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