Assignment Submission GROUP 9
Q1) What are the different types of funding available to startups?
Funding for the start-up depends on the stage of growth, as well as the industry and the business
model they employ. Some of the famous types of funding available for the status are-
1. Bootstrapping
● In the bootstrapping form of start-up funding, the founders bring their own set of savings
or revenue from their other business to fund the operations.
● This type of funding is ideal for startups, which are in their early stages and have very
limited expenses.
● The key advantage Boot strapping is that there is a full control and ownership in the hand
of the founders as they do not have to share the profits or equity.
● However, there is also a disadvantage to this kind of funding, which is that limited capital
is available for the founders, which hampers the growth of the start-up
2. Friends and family
● This is one of the easiest way to raise money for the start-up as it does not require enough
documentation and the other paperwork. This kind of funding relies mostly on the
personal networks that the founder has. This type of funding is best suited for seed estate
start-up. Apart from this, there is the disadvantages like risk of straining the personal
networks, if unable to return money back to the family and friends.
3. Angel Investors
● These are high net worth individual who put their money into the startup for the exchange
of some kind of equity.
● It is best suited for startups that are in their early growth.
● One of the key advantage of this kind of funding is that it expose the founders to the
mentorship and the industry connections which can be leverage for the growth of the
startup. However, there is also disadvantage which is that profit has to be shared with the
investors.
4. Venture capital
● Investment forms, which provide capital and invest in exchange for convertible debt or
equity, were suited for starters with high growth potential.
● It brings a lot of money into the business and provides membership and networks to the
founders through venture capitalists.
● There are a lot of advantages to this type of funding, but the key drawback is that the
equity has to be shared with the investor, along with the loss of decision-making
autonomy to the founders.
5. Crowdfunding
● To raise a small amount of money from a large number of people, we use crowdfunding,
which is done by online platforms.
● It is ideal for the ideas which has a mass influence and require public content over that.
6. Bank loan
● Traditional loans and credit from the banks are the major source of capital infusion into
the business.
● It is suitable for the start of which have the strong financial projection and have the
capacity to stake the collaterals.
● The key disadvantage is that there is use repayment organisation and strict qualification
criteria.
● But the advantage is that there is no need to dilute the equity; only fixed repayment terms
are there.
7. Government Grants
● To motivate the start-up to innovate the product, which has a positive societal impact, the
government of India provides certain Cities and grants to the startups to promote
entrepreneurship.
● Ideal for the start-up that is catering to societal needs
● Advantages are that we do not have to repay the funding, so there is no equity loss
● Disadvantages could be that the process to take the investment consists of the application
process.
Q2) Present a comparative analysis of the following three types of investment options:
crowdfunding, Angel, and VC. List the advantages and disadvantages of each (from an
entrepreneur’s perspective)
Aspect Crowd funding Angel Investment Venture Capital (VC)
Crowdfunding Angel investment refers Venture Capital involves
involves raising small to individual high-net- professional investment
Definition amounts of money worth investors firms pooling funds from
from a large number of providing capital to investors to back high-
individuals, usually early-stage startups in growth startups, typically
Aspect Crowd funding Angel Investment Venture Capital (VC)
through online exchange for equity or in exchange for equity,
platforms like convertible debt. and often focusing on
Kickstarter or equity later-stage businesses.
crowdfunding sites.
Typically small Angel investors provide Venture Capitalists
amounts of money, moderate amounts of provide significant
suitable for projects capital, often ranging funding, often millions of
that don’t need large from a few thousand to dollars, allowing for
Funding Size
amounts to get started. a few million dollars, aggressive scaling and
Great for early-stage or useful for early-stage expansion into new
consumer product ventures looking to markets or major product
funding. scale. development.
In reward-based
crowdfunding, there’s Moderate equity loss;
Significant equity loss;
no equity loss, as the angel investor
VCs often take large
backers only get usually takes a minority
equity stakes and
rewards. In equity- share in exchange for
CoControl Loss negotiate for a high level
based crowdfunding, their investment and
of control, including
some equity is given mentorship, but they
board seats and veto
up, but it’s typically may seek influence in
rights.
less than what a VC major decisions.
would require.
Angels often provide
VCs offer substantial
Crowdfunding not just funding, but
mentorship, governance
provides a direct link also valuable guidance,
support, and strategic
Mentorship & to your customer base, industry insights, and
insights, as they have vast
Network but offers little access to their
networks, resources, and
professional guidance networks, which can be
industry expertise to help
or mentorship. crucial for early-stage
a company scale.
businesses.
Crowdfunding Angel investors
Venture Capital decisions
campaigns can move typically make
are slower and more
quickly, but successful decisions fast, as they
structured, as VCs need to
fundraising requires are individuals or part
Decision Speed conduct extensive due
ongoing marketing and of small networks. They
diligence and involve
engagement with can move quickly
multiple stakeholders in
backers, which can without the bureaucracy
the decision process.
take time. seen in larger firms.
Aspect Crowd funding Angel Investment Venture Capital (VC)
In reward-based crowd
funding, there is no Angel investments lead
VC investment results in
equity dilution. to moderate dilution, as
high dilution, as VCs
However, in equity the investor often
typically require a large
Dilution crowd funding, the receives a minority
equity stake to justify the
dilution is usually stake in the company.
risk, often seeking 20-
minimal compared to The amount varies
40% of the company.
angel or VC based on negotiation.
investments.
Angels can be very VCs are deeply involved
Backers in crowd
involved in the in the companies they
funding are usually not
company’s operations, invest in, often taking
involved in day-to-day
depending on the board seats and
operations and are just
Involvement agreement. Some may influencing major
supporting the product,
offer mentorship and strategic decisions,
but they can provide
strategic advice, while including hiring, product
feedback and act as
others may take a more direction, and financial
brand advocates.
hands-off approach. management.
Crowdfunding is ideal
Angel investment is Venture Capital is
for testing products
best for early-stage typically used by
and gaining market
businesses that need companies that are past
validation with
capital to take their the seed stage and need
Use Case potential customers
product to market or large amounts of capital
before going full-scale.
grow, but not yet ready to scale rapidly, enter new
It’s good for products
for large institutional markets, or develop major
that have strong
investment. products.
consumer appeal.
Angel investors can Venture Capital firms
Crowdfunding often sometimes provide provide continuous
doesn’t offer much follow-on funding or support and can help
Follow-on follow-up funding or introduce entrepreneurs secure follow-on funding
Support investor support. It’s to other investors, but rounds. They often bring
primarily for initial this depends on the an ecosystem of investors
validation. individual angel’s and partners to support
capabilities. the business’s growth.
Crowd funding carries Angel investors carry VC funding involves
Risk the risk of public some risk of losing their intense pressure to grow
failure, which can investment, but they fast and meet aggressive
Aspect Crowd funding Angel Investment Venture Capital (VC)
damage the brand, and often accept higher risk goals, which can lead to
there is also the risk of in exchange for the significant stress and
idea theft if you potential of high strategic conflicts. Failure
disclose too much returns. The relationship to meet these expectations
publicly. can be strained if can result in loss of
expectations aren’t met. control or the business
being shut down.
VC funding brings high
Crowdfunding Angel investors are
visibility, especially if the
campaigns often attract usually not focused on
firm is well-known. The
significant media and visibility, but their
business can benefit from
Visibility consumer attention, reputation can lend
the VC’s prestige and
which can enhance credibility to a startup,
media attention, boosting
visibility and brand especially if they are a
brand recognition and
awareness. well-known figure.
trust.
Crowdfunding requires Venture Capital
Angel investments are
a lot of time and effort investment involves a
less complex than VC,
for marketing, building rigorous, often lengthy
but still require legal
a campaign, and process with due
documentation,
engaging with backers. diligence, detailed
Time/Complexity negotiations, and
There is also the negotiations, and complex
relationship-building.
complexity of fulfilling legal documentation. It’s
The process can be
rewards and highly structured and
quick, but depends on
maintaining involves many
the angel.
relationships. stakeholders.
Venture Capital firms,
Platforms like
Networks like accelerators, and
Kickstarter, Indiegogo,
AngelList, personal institutional investors
Typical Platform or equity
connections, or specific typically fund later-stage
or Channel crowdfunding sites like
angel investment startups through formal
SeedInvest or
groups. rounds such as Series A,
Republic.
B, etc.
Q3) Describe the platform business model of AngelList.
Angel List’s Platform Business Model:
Angel List operates as a platform that facilitates connections within the early-stage startup
ecosystem. It primarily connects two distinct groups:
Start-ups (Producers): These are the companies seeking funding. They create profiles
on AngelList to showcase their business and attract investors.
Investors (Consumers): These are the individuals or firms who provide funding. They
use AngelList to discover and evaluate potential investment opportunities in startups.
How Angel List’s platform model functions:
Core Interaction: Angel List enables start-ups and investors to find and connect with
each other for the purpose of early-stage fundraising.
Value Creation: Angel List creates value by:
Reducing search costs and inefficiencies in the fundraising process.
Providing a centralized platform where startups can reach a wide range of investors.
Offering tools and information that help investors evaluate startups.
Platform Features:
1. Profiles: Both start-ups and investors create profiles, providing key information to
facilitate matching.
2. Search and Filters: The platform offers search and filtering tools to help users find
relevant connections.
3. Screening and Curation: Angel List uses algorithms and manual review to highlight
promising start-ups to investors.
4. Social Networking Features: The platform incorporates social networking elements to
foster interaction and community.
Network Effects: The value of AngelList increases as more startups and investors join the
platform. A larger pool of startups attracts more investors, and a larger pool of investors attracts
more startups.
In summary, Angel List’s platform business model is designed to streamline and improve the
early-stage funding process by connecting startups and investors, leveraging technology to create
a more efficient and transparent market.
Q4) What would be a Good pricing strategy for Angel List
Agrisangam equips SHGs, FPOs, and rural entrepreneurs with a technology-based platform
providing market linkages, guidance, and access to finance—enabling a "digital mandi" backed
by grassroots support.
Pricing Strategy for AngelList India
1. Seed Round Request
We're seeking ₹75 lakhs to:
Scale our working MVP to 3 states (MP, Gujarat, Rajasthan)
Onboard 1,000+ rural producers
Form alliances with market participants and Agri fintech partners.
Enhance our tech backend and field operations
2. Valuation & Equity Offer
We are providing:
10% share for ₹75 lakhs
Estimated pre-money valuation: ₹6.75 Cr
Why this valuation?
MVP was tried with SHGs and FPOs in IRMA-linked clusters
Early collaborations secured (1 FPO MoU, 2 NGOs to pilot)
Network of founders with rural outreach and IRMA credibility
3. Investor Tiers (to construct a value-aligned cap table)
Investment
Tier Offer Ideal For
Range
Village Quarterly updates, social IRMA alumni, early believers,
₹2.5 – ₹5 lakhs
Champion impact dashboard rural ecosystem allies
Sangam Access to the advisory Domain experts, CSR partners,
₹10 – ₹25 lakhs
Partner circle, field pilot invites mid-sized funds
₹30 lakhs and Board observer role, co- Institutional backers, aligned
Lead Anchor
above branding in pilot areas VCs, and impact investors
4. Early Commitment Sweetener
Early ₹25 lakhs invested within 30 days comes at a discounted valuation of ₹6 Cr, allowing
aligned early believers to enjoy lower dilution.
5. Transparent and Impact-driven Funds Allocation
Tech Build & Backend Integration: ₹20L
Field Operations & Rural Partner Onboarding: ₹25L
Market & Logistics Linkages: ₹15L
Team & Impact Reporting Infrastructure: ₹ 10 L
Compliance & Working Capital: ₹5L
