Capital Raising is confusing. Here are some basics of capital raising.

<aside> 💵 FUNDING TYPES

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<aside> 💵 Equity Funding

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Selling a stake in the business in exchange for capital, bringing in investors who contribute money and expertise.

Dilutes the founders' ownership and control over the business.

<aside> 💵 Venture Debt

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Debt financing provided to venture-backed companies, offering growth capital without diluting ownership.

Repayment is expected regardless of business success, adding financial risk.

<aside> 💵 Small Business Loans

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Debt financing provided to venture-backed companies, offering growth capital without diluting ownership.

Repayment is expected regardless of business success, adding financial risk.

<aside> 💵 Business Grants

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Non-repayable funds provided by governmental bodies, corporations, or foundations, often for specific business purposes or sectors.

Highly competitive and often require fulfilling specific criteria or conditions, but they don't require giving up equity or repaying the amount.

<aside> ⛲ INVESTMENT SOURCES

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<aside> ⛲ Venture Capital

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VC’s provides significant funding and strategic resources in exchange for equity, often during the growth stage of startups.

<aside> ⛲ Venture Capital

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Angel investors are high-net-worth individuals who offer capital, personal expertise, and connections in exchange for equity or convertible debt.

<aside> ⛲ Syndicates

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Syndicates are groups of investors pooling their resources to invest larger amounts, led by experienced investors and offering diverse expertise.

<aside> ⛲ Accelerators

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Fixed-term programs providing mentorship, education, and small investments in exchange for equity, within a supportive and network-rich environment.

<aside> ⛲ Grants

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Grants are non-repayable funds given by entities like governments, corporations, or foundations, often for specific purposes, without requiring equity exchange but with competitive and stringent application processes.

<aside> ⛲ Venture Studios

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Venture Studios provide services for startup founders such as product development and consultation. These studios may invest in startups through a sweat equity arrangement.

<aside> 🚘 INVESTMENT VEHICLES

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<aside> 🚘 SAFE Note

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Simple Agreement for Future Equity - An agreement that grants investors the right to receive equity in a future priced round, often without a maturity date or interest.

<aside> 🚘 Convertible Notes

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Short-term debt that converts into equity, typically in conjunction with a future financing round.

<aside> 🚘 Equity

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Direct investment in exchange for shares in the company, establishing a direct ownership stake.

Considerable legal costs in issuing shares and onboarding shareholders.

<aside> 🚘 Preferred Stock

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A type of equity that gives holders preference over common stockholders in terms of dividends and assets distribution in case of liquidation.