Secure Equity Financing for Startup : Service Description

This service is part of our Raise Capital program. We help you get equity investment for your startup through connecting you with the suitable angel investors and venture capital funding from our network that fit your startup’s stage, sectors and location. We also help you equity financing through equity crowdfunding. We help you find the right equity crowdfunding platform for your startup and we work on building and promoting your campaign.

2. Get Equity Financing for Startup from Angel investors

Angel investors usually provide capital in exchange for equity or convertible notes. The amount of equity they usually take depends on the amount invested and the startup’s valuation. The average investment of angel investors ranges between $100K and $250K in a funding round. Angel investors are the best equity financing type for startups in all stages even for late stage companies that are seeking growth capital or early stage startups that are seeking early funding. Some business angels invest on their own or as a part of a network (micro VCs). Most angel investors are entrepreneurs themselves and they have great skills, business expertise and connections, so they can bring all these resources and contacts to the startup besides capital. Angel investors have an active role in the startup through advising and mentoring. Some of the advantages of raising capital from angel investors is the flexibility as angel investors tend to take investment decisions quickly compared to VCs. Also, the negotiation with angel investors is considered more flexible than negotiations with VCs. It might take time to find angel investors for your startup as most angel investors invest as part of an unofficial group that has no website and contact info. Also, finding angel investors through Social Media platforms like Linkedin and Facebook doesn’t always yield good results as you can’t find the right angel investor based on your startup’s stage, industry and location as this info isn’t on the investor’s profile. Not to mention that angel investors rarely invest in opportunities that come from platforms like Linkedin.

There are a number of different types of angels. The most common type is the angel investor who invest in early rounds of funding. These rounds are usually between $500,000 and $1 million. Another type of angel investor is the venture capitalist. Venture capitalists invest in later rounds of funding, which can be anything from $5 million to $50 million.

We help you find angel investors for you through matching your startup with angel investors from our network based on your startup’s stage, sector, county and other parameters. We also take into account the amount of money that you need (that we have agreed on in the funding planning phase), the industry, the interest of the angel investor and their success’ exits. See our business angel capital service.

Our network has 150,000 angel investors who invest in startups from all stages and industries. The distribution is around 50% in USA & Canada, 25% in Europe and 25% in the rest of the world. We take good care in bringing only certified angel investors because we don’t want any “dirty money”. In the USA, Canada and Europe, the investment is very well regulated and that is why most of the investors are from there.

We don’t send mass or cold emails to angel investors. What we do is that we come up with a list of the interested ones and introduce you to them through warm introductions that are based on shared connections. We don’t only help you find the right angel investors and introduce you to them, we also help you in closing deals with angel investors and negotiating the funding terms through our negotiations with angel investors service.

3. Get Equity Financing for Startup from Venture Capital

VCs usually invest in startups in advanced stages like starting from seed stage. They invest large amount of capital compared to business angel capital. Venture capitalists may provide funding through convertible debt or equity investments in companies that they believe have potential for rapid growth. These risks tend to be greater than those associated with traditional sources of equity financing, but venture capitalists are often willing to take on these risks in order to invest in innovative companies and potentially wind up making a large return on their investment down the road.

The startup needs to have good traction and high growth potentials in order to secure VC funding as VCs can be hard to convince due to the great number of startups they are receiving on a daily basis, so the startup should have a unique selling points and other competitive advantages and high ROI VCs usually invest with a minimum amount of $2M. Smaller VCs like regional VCs might invest less. Similar to angel investors, VCs don’t only provide money, they also provide business advice and mentorship and they contribute to the startups overall growth. Each VC firm has its own investment criteria. Although, some of them are flexible in their investment and might consider investment opportunities that don’t fit their criteria, some of them can be very strict and selective. Some entrepreneurs end up approaching the wrong VC due to not performing research and due diligence about the VC. This could be due to lack of resources and connections. Finding VCs online is popular among entrepreneurs; however, we don’t recommend it as you will be only limited to people who are in your network as there are many VCs that are not active on Social Media platforms like Linkedin and you will be missing the opportunity to discuss with them.

Through our venture capital funding service, we help startups in getting venture capital funding through matching them with the right VC from our network. Our network includes 30.000 VCs and 20.000 micro VCs worldwide. You might find difficulty in finding the right VC and making sure that your startup meets their criteria as some VCs are not clear and straightforward with their investment criteria. What we do is that we use our AI system to match you with VCs based on your startup’s stage, industry and location. We also match you with VCs based on the average investment amount of the VC and make sure it fits the amount you need. If you are looking for more than money, we can match you with a VC that provides mentorship and advisory through using our AI system for matching as well. We use a different approach for the introductions that is not based on mass emails nor on sharing your pitch deck on a platform. We introduce you to VCs through shared connections to make sure we have a high response rate. We get a 20%-40% response rate.

We also help startups in closing the funding deal with VCs and negotiating the terms of funding through our negotiations with VCs service. We help you structure the funding deal including funding timeframes, equity shares, and instalments, among others. We take the role of a mediator. Our team of financial experts will be with you at the negotiations sessions and will help in providing insights to reach best results and closing the deal on the right terms for both sides.

When pitching your startup to potential investors, make sure you understand their key concerns. Some of the most common questions that venture capitalists ask are:

What is your business model?

What are your revenues and margins?

Who are your customers?

What are your competitors?

What is your competitive landscape?

Get Equity Financing for Startup through Equity Crowdfunding

Unlike conventional ways of raising capital from a small group of angel investors, Equity Crowdfunding allows startups to target a wider network of angel investors. Equity Crowdfunding allows startups to raise small amounts of capital from many investors. With equity investment everybody can invest, not only angel investors and VCs. Equity crowdfunding usually occurs online via equity investment platforms and each platform has its own terms. Equity crowdfunding is different from other types of crowdfunding like reward and donation crowdfunding. It has a more conventional method, which is raising capital against securities. There are many equity crowdfunding platforms available for startups from all stages and industries, such as OurCrowd, Seedrs, Crowdcube, FundersClub and others.

Equity crowdfunding is a new way for small businesses and start-ups to raise money from a large number of people. Crowdfunding is different from other forms of financing because the investor doesn’t get anything in return except a share of the company. This type of financing is becoming more and more popular, as it allows entrepreneurs to bypass the traditional financial institutions and raise money from a large number of people.

Startup Crowdfunding is one of the services provided through our Raise Capital program. We help startups in getting equity financing through crowdfunding by helping them in building their crowdfunding campaign and promoting it. We also help them get angel investment through connecting them with angel investors from our network in addition to their crowdfunding campaign in order to increase their chances of raising capital and getting angel capital for their crowdfunding campaign. We also help them in identifying the amount to be raised and the equity they need to give up to the angel investors they get through their crowdfunding campaign.

5. Get Equity Financing and Value your Startup

The valuation of your startup will determine the amount of equity you will give up to investors, so you need to work on having a fair valuation for your startup before giving up equity to protect your ownership. There are a variety of ways to value startups for an equity investment. A number of factors can be taken into account when valuing a company, including its stage of development, industry focus, and potential market sizes. The higher the valuation, the more money a startup can earn and the more likely it is to achieve profitability and sustainability; however, this will lead you to give up a large amount of equity. On the other hand, a low valuation can discourge investors from investing.

When valuing a startup, there are a few key things to consider:

1. The company’s potential. This includes the market potential for the product or service, as well as the competitive landscape.

2. The company’s financial situation. This includes the size of the company and its cash flow, as well as its debt levels and ability to raise additional capital.

3. The company’s management team. This includes the experience and skills of the founding team, as well as their track record of success.

4. The company’s intellectual property (IP). This includes any patents, trademarks, or other intellectual property rights that the startup may have.

We help entrepreneurs value their startups for equity financing. We take into account the startup. We take into account what is unique about it that makes it valuable to others, how much growth potential exists for the startup, competitive landscape, the startup place in today’s market, among others. We apply different valuation methods based on the startup stage. Read more about our startup valuation service.

Quick Tip

There are a few things to keep in mind when issuing equity:

When choosing an equity offering, it is important to consider the potential returns of the business, as well as how much risk the startup poses for shareholders. Also important when considering an offer is whether or not to dilute an already diluted shareholding with another round of stock sales or other transactions. There are a variety of factors that should be considered when making this decision including:

• The price per share offered

• The size of the company

• The number of shares available for sale

• The amount of early bird access available

6. Get Equity Financing for Startup and Advice on your Startup Dilution

The basic concept behind dilution is that when a company issues more shares of itself, it increases its diluted share count. This increase in diluted share count means that more people are able to buy or sell shares of the company, which can lead to increased volatility and stock prices. Understanding dilution can help companies understand their own risks and potential opportunities, identify potential new investors, and better assess their financial outcomes.

We advise startups that are looking for equity financing on dilution matters. We study how often a new share is issued relative to the total number of shares outstanding. The goal is to increase the startup valuation so its stock can be worth more when it’s sold to investors. We also advise the startup on how much equity it needs to give to investors when we work on planning for raising capital.

Quick Note

Dilution also affects a company’s ability to raise capital by issuing new shares. When a company has an increasing number of diluted shares, it will be less likely to find new investors who will offer money on pre-existing investment deals. Additionally, as investors become increasingly interested in companies with lower diluted level.

Quick Note

Mezzanine finance is a kind of investment that allows early-stage startups access to large sums of money up front, which can then be invested back into the company as needed. Typically, mezzanine financing includes both an initial capital infusion and long-term debt repayment terms.

Quick Tip

There are a number of factors to consider when seeking investment: the company’s ability to generate revenue, whether it is an early stage company, the risk associated with its operations, and how well the company executes on its business plan.

9. Equity Financing Methods for startups

Equity financing methods are a way to raise money by selling shares of your company to the public. This allows you to access capital quickly, which can help you grow your business. Equity financing methods include:

• 1. Initial Public Offering (IPO): The most common equity financing method, an IPO allows companies to sell shares to the public. This is the most popular way for startup companies to raise money, as it offers investors a chance to become part of the company and receive shares at a discount compared to later rounds of fundraising.

  2. Secondary Market: Investors can also purchase shares of a company on the secondary market, which is often faster and more liquid than the stock market. This means that there is more opportunity for investors to buy and sell stocks quickly, which can lead to greater price volatility and riskier investments.

  3. Private Placement: A private placement is a less common equity funding method that allows companies to sell fewer shares than an IPO or secondary market transaction typically between 10 and 100 percent of their issued share capital. This prevents investors from profiting immediately from share price appreciation, but offers valuable opportunities for insider trading and other misconduct.

  4. The most common equity financing method is the issuance of common stock. This allows shareholders to share in the upside potential of the company. Issuing common stock also has the potential to reward early investors, as the value of the stock will likely increase over time.

Skyson Capital helps entrepreneurs that are looking to raise capital against equity in identifying the right equity financing option taking into account the startup’s stage and valuation. We also take into account the equity financing source (angel investors or VCs).

Quick Tip

There are a few things to keep in mind when issuing equity:

• The value of the equity should be equal to or greater than the amount of money investors are asking for their shares. This is called “the break-even point.” If the break-even point isn’t met, then investors may not invest, which could lead to a liquidity crisis.

• Equity should be issued in amounts that will allow the company to grow without going into debt. If too much equity is issued, it could lead to issues such as overvaluation and stock buybacks (a type of dividend payout).

  Equity can only be sold during certain periods known as “windows.” These windows usually open and close every few months, and they depend on how active the market is at that time. For example, companies may issue new equity during “primary” windows (when stock prices are high) and “secondary” windows (when stock prices are lower).

• Equity can only be sold during certain periods known as “windows.” These windows usually open and close every few months, and they depend on how active the market is at that time. For example, companies may issue new equity during “primary” windows (when stock prices are high) and “secondary” windows (when stock prices are lower).

10. Equity Financing Strategies for Startups

Equity financing strategies are used in business to raise money by selling shares of the company to investors. The goal of equity financing is to give the company a quick infusion of cash, while also giving the investors a piece of the company. Equity financing can be divided into two main categories: convertible and non-convertible equity.

• Convertible equity is equity that can be converted into common stock at a set price or upon certain conditions being met. This type of equity gives the investor the right to buy common stock at a set price, and provides protection in case the company goes public or sells more shares than expected.

• Non-convertible equity does not have a set price or expiration date, and is usually tied to profits rather than share prices. This type of equity gives investors more exposure to risk but also allows them to participate in upside potential if the company does well.

• Hybrid financing combines elements of both debt and equity financing. For example, a company might issue debt that is convertible into shares at a later date. This type of financing is used when a company needs more money but doesn’t want to give up its ownership stake.

We help you choose the right equity financing strategy that fits your business plans and goals. We take into account the type of equity method and option you have chosen.

Quick Tip

There are several important factors to consider when choosing an equity financing strategy: the terms of the offer (such as conversion rate and grace period), maturity date, liquidation preference (the amount of money that gets distributed first before any remaining assets are sold), tax implications, and legal structure (such as whether it’s an LLC or corporation). Each offers its own unique advantages and disadvantages, so it’s important to carefully weigh all of them before making a decision.

11. FAQs about Equity Financing for Startup

What is the average amount of equity I need to give up in my startup?

It depends on the source of funding (business angel capital or venture capital funding) and the startup valuation. Angel investors usually take between 20% to 25% equity. It depends on how they are engaged in your startup and on the support they are providing.

Does Skyson Capital invest in startups and how much equity does it take?

We do invest in startups in the form of technical and business development only through our Tech Cofounder and Grow your Startup programs. The amount of equity we take depends on the investment we make and the valuation of the startup.

How can Skyson Capital help me in getting equity financing for my startup?

We can help you through our Raise Capital program. We help you through connecting you with angel investors and VCs from our network. We study the startup and identify the right valuation and amount to be raised, then we determine the right funding source accordingly. We also help in the negotiations with angel investors and negotiations with VCs and closing the deal.