...Most startups that raise money do it more than once. A typical trajectory might be (1) to get started with a few tens of thousands from something like Y Combinator or individual angels, then (2) raise a few hundred thousand to a few million to build the company, and then (3) once the company is clearly succeeding, raise one or more later rounds to accelerate growth. Reality can be messier. Some companies raise money twice in phase 2. Others skip phase 1 and go straight to phase 2. And at Y Combinator we get an increasing number of companies that have already raised amounts in the hundreds of thousands. But the three phase path is at least the one about which individual startups' paths oscillate. This essay focuses on phase 2 fundraising. That's the type the startups we fund are doing on Demo Day, and this essay is the advice we give them. Forces Fundraising is hard in both senses: hard like lifting a heavy weight, and hard like solving a puzzle. It's hard like lifting a weight because it's intrinsically hard to convince people to part with large sums of money. That problem is irreducible; it should be hard. But much of the other kind of difficulty can be eliminated. Fundraising only seems a puzzle because it's an alien world to most founders, and I hope to fix that by supplying a map through it. To founders, the behavior of investors is often opaque—partly because their motivations are obscure, but partly because they deliberately mislead you. And the misleading...
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...How to Raise Money Want to start a startup? Get funded by Y Combinator. September 2013 Most startups that raise money do it more than once. A typical trajectory might be (1) to get started with a few tens of thousands from something like Y Combinator or individual angels, then (2) raise a few hundred thousand to a few million to build the company, and then (3) once the company is clearly succeeding, raise one or more later rounds to accelerate growth. Reality can be messier. Some companies raise money twice in phase 2. Others skip phase 1 and go straight to phase 2. And at Y Combinator we get an increasing number of companies that have already raised amounts in the hundreds of thousands. But the three phase path is at least the one about which individual startups' paths oscillate. This essay focuses on phase 2 fundraising. That's the type the startups we fund are doing on Demo Day, and this essay is the advice we give them. Forces Fundraising is hard in both senses: hard like lifting a heavy weight, and hard like solving a puzzle. It's hard like lifting a weight because it's intrinsically hard to convince people to part with large sums of money. That problem is irreducible; it should be hard. But much of the other kind of difficulty can be eliminated. Fundraising only seems a puzzle because it's an alien world to most founders, and I hope to fix that by supplying a map through it. To founders, the behavior of investors is often opaque—partly because...
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...minimum wage will solve all of our problems, when in reality it will not. It would only reduce the human motivation. Raising the minimum wage would also eliminate jobs making the economy struggle more. There would not be enough money circulating through the economy. Raising the minimum wage would reduce human motivation, eliminate jobs, raise taxes, and make the economy go into a hyperinflation. Raising minimum wage will reduce human motivation. In a perfect world where everyone comes from a good home, and lives in society, where people are raised to strive for better. In today’s society we do not have the perfect world. We have children being raised up to where they have to find a job at a young age just to help support their family. Children being raised up in a home like this creates a loss of ambition. Imagine, only being a child getting a job at such a young age. The only thing on your mind is being able to support the family with the money that is coming in. Imagine fighting to get the education back that was lost. Imagine not being able to go to school because there is no more time or money to help out yourself. Then the day comes where everything is lost. The loss of ambition. The loss of education. The loss for hope. Now these children only know how to make ends meet. They want more, but they can’t have it. So raising minimum wage would create people staying in their own ways. They will chose a path that just suits their own needs rather than looking at a bigger picture...
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...How to Raise Money Want to start a startup? Get funded by Y Combinator. September 2013 Most startups that raise money do it more than once. A typical trajectory might be (1) to get started with a few tens of thousands from something like Y Combinator or individual angels, then (2) raise a few hundred thousand to a few million to build the company, and then (3) once the company is clearly succeeding, raise one or more later rounds to accelerate growth. Reality can be messier. Some companies raise money twice in phase 2. Others skip phase 1 and go straight to phase 2. And at Y Combinator we get an increasing number of companies that have already raised amounts in the hundreds of thousands. But the three phase path is at least the one about which individual startups' paths oscillate. This essay focuses on phase 2 fundraising. That's the type the startups we fund are doing on Demo Day, and this essay is the advice we give them. Forces Fundraising is hard in both senses: hard like lifting a heavy weight, and hard like solving a puzzle. It's hard like lifting a weight because it's intrinsically hard to convince people to part with large sums of money. That problem is irreducible; it should be hard. But much of the other kind of difficulty can be eliminated. Fundraising only seems a puzzle because it's an alien world to most founders, and I hope to fix that by supplying a map through it. To founders, the behavior of investors is often opaque—partly because...
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...A huge controversy in the economics world in 2012 has been a possible raise of the minimum wage from $7.25 to $9.00. Many supporters of this increase believe that a $9.00 minimum wage would enable many adults to make enough money to live off for a year. This wage increase would give low-income families a chance to make more money to support themselves and their families. Following this, supporters say these so called “low-income” families would spend more, thus resulting in an increased flow of money in the economy. However, what these supporters do not see is, many of these families will go to large department stores or super stores to make their purchases. With these large stores getting all the money many small businesses will be forced to close their doors. In addition to small businesses losing these customers, employers will be faced with another tough decision. In many small businesses employees are paid based on their skill, position, or time of employment. Many of these workers are paid the minimum wage because employers of a small business are unable to pay them any higher in order to keep their store or shop open. So what happens? Employees that currently being paid $7.25 will now be paid $9.00 and those higher level employees being paid $9.00 would be also given an approximant pay raise to $11.00 per hour. Now, how does this hurt small business owners? Here is a possible scenario. Max is the owner of a small sports shop in Waverly that has been open for ten years...
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...equally likely, so the shares currently trade for $13.50. IST must raise $500 million to build a new production facility. Because the firm would suffer a large loss of both customers and engineering talent in the event of financial distress, managers believe that if IST borrows the $500 million, the present value of financial distress costs will exceed any tax benefits by $20 million. At the same time, because investors believe that managers know the correct share price, IST faces a lemons problem if it attempts to raise the $500 million by issuing equity. Question a. Suppose that if IST issues equity, the share price will remain $13.50. To maximize the long term share price of the firm once its true value is known, would managers choose to have equity or borrow the $500 million if i. they know the correct value of the shares is $12.50? SOLUTION If the firm knows that the correct value of the shares is $12.50, the correct thing to do to raise the $500 million would be by issuing equity. The share price would be overpriced at $13.50 so by issuing equity it lets investors know that its equity is overpriced. When this happens, investors are willing to pay les for the equity. Question ii. the know the correct value of the shares is $14.50? SOLUTION If the firm knows that the correct value of the shares is $14.50, the correct thing to do to raise the $500 million would be by borrowing the money. When managers know that the firm’s...
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...Federal Budget Deficit/Surplus I'm looking at a comment in speech when Obama talked about the federal budget. Obama reached a deal to increase spending over the next two years by cutting some social programs and raise the federal borrow limit. He reached an agreement that would raise spending by $80 billion and an extra 32 billion dollars for the emergency war fund. By increasing spending, it would make cuts in medicare and social security disability benefits, etc… The $80 billion is just over one percent of the yearly annual budget. Obama uses Obamacare as a way to lower the debt in a way the differentiating taxation. President Obama is concerned with the people of the United States, but he is still trying to raise the money by making...
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... but help you stay there. FUNDRASER HOW WE DID IT: Started off with the lemonade stand (selling approach) on the corner where the stop sign is. Bye humane society. (noticing how many students visited. Bagging groceries: both involved with Bagging groceries through church Plymouth covenant. Gave us the idea. Pastor Dan gave us the idea because we went to him. Groceries best idea Experience Getting involved in community Seeing appreciation from people for offering our help And them giving there money to the people in need People’s reactions/ thoughts: Lemonade stand: The few people that stopped by wanted to know what we were doing and for what, so we explained to them that it was for a class and we were fundraising to raise money for The United Way and how it was going to help so many people. Most people were walking and stopped by to buy some lemonade GLOBAL IMPACT: Improving education: by helping children in youth achieve their potential. In the video watched, I noticed that they not only help you get on your feet, but make sure you stay on your feet. Income: promote financial stability and independence Health: improving peoples health WHAT WE COULD’VE DONE BETTER: Get opinions around campus about what people would actually buy or attend so we could base it off of that and have a better success rate Topic: The United Way Fundraiser Specific Purpose: Working in a group, and trying to raise as much money as we can for Central Idea: connecting...
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...Crowd funding Platforms and Further Considerations 8 2.3 Finance Challenges 9 2.4 Interest rate 10 2.5 Success factors 11 2.5.1 Crowd funding fit 12 2.5.2 Realistic pricing 12 2.5.3 Building trust 12 2.5.4 Media expertise 12 3.0 Methodology 14 3.1 Introduction 14 3.2 Research approach qualitative 14 3.3 Sampling strategy 14 3.4 Data collection 14 3.5 Data analysis approach 16 3.6 Interview questions 16 3.7 Validity and reliability 16 4.0 Findings 17 5.0 Conclusion and Recommendations 23 5.1 Conclusion 23 5.2 Recommendations 23 6.0 Bibliography 25 1.0 Introduction 1.1 Definition of crowd funding Crowd funding is a way for businesses, organizations and individuals to raise a fixed amount of money via the Internet, the purpose of the money refers to amount of efforts by different entrepreneurs, such as business cultural, social responsibility, and for profit. The funding of one company was drawing on relatively small contributions from many investors, and without standard financial intermediaries. In one of the whole published overviews of the topic, Schwienbacher & Larralde (2010) define crowd funding as “Crowd funding is an open call, essentially through the Internet, for the provision of financial resources either in form of donation or in exchange for some form of reward or voting rights in order to support initiatives for specific purposes”. Crowd funding has another meaning which is in the concept of crowdsourcing, it is the broader...
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...evaluation and how people and business raise capital to fund their projects. It involves the payment or receipt of money in the future. • Efficient market-Is a market where all information is available to participants and prices respond to that information. Stock markets are considered efficient markets, and corporations use them to raise capital for the firm. • Primary market-Is the market in which securities are bought and sold for the first time. Corporations use the primary market to raise money for the firm. Generally, the transaction is facilitated by an underwriter (bank, or financial institution). • Secondary market-Is the market in which securities previously issued are transferred from one owner to another. In this market, transactions take place face to face (organized securities exchange), or over the counter (phone or internet). • Risk-Is the potential of loss generated from a given action. Firms study and evaluate their potential risk before incurring in a determined activity. Usually a higher risk financial activity brings higher returns, and low risk financial activities bring lower returns. • Security- Is a negotiable financial instrument for investors and borrowers. There are two types of security: Debt securities (notes and bonds); and equity securities (common and preferred stock). • Stock-Is a form of security that provides ownership in the form of dividends and capital appreciation of the stock. Firms use common and preferred stock to raise money for the...
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...inflation is by the application of Quantitative easing. This would mean that AD would increase price and price levels raise, thus increasing levels of inflation. What QE is, is the banks buying government bonds or gilt’s from private sector companies, this will make the price of the gilts rise and making them a less attractive investment. Companies can then use the money to invest in other things. This will also raise money supply by lowering interest rates. This will lead to businesses being able to borrow at cheap, for these reasons quantitate easing will increase inflation. On the flip side QE is wholly dependent on the banks involved and the way in which they treat their customers, if for example a bank does no pass on the money that they are supplied with to the correct people than they are not going to benefit in a way that is satisfactory to shift out the AD curve and raise inflation. Furthermore this could damage confidence that is within the business or consumer and thus leave them with a Purchasing power parity. This will mean that consumers do not have the leverage to borrow at cheap rates and are unwilling to spend and build up unneeded debts. Monetary policy could be used as a way to raise inflation, by adjusting the interest rates in a country within the Eurozone you can inevitably change the entire outlook of how a consumer can spend the borrow money. The lower interest rates will enable consumers to invest in things that were not applicable to them previously. This...
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...China) 5. Name basic institutions of effective capitalism Provate property rights, market system, no corruption, monetary stability, openess of economy 6. Name basic recommendations or elements of merchantilism Encouraging agriculture, ecenomic wealth can be measured by precious metal (silver/gold); export over import, merchant fleet as vital importance, government involved in economy 7. Key elements of national competetiveness Basic institutions, infrastructure, stability 8. Name main elements of firm competetiveness Demand and supply, financal performance, investment ratio 9. When Keynesian policies to fight recession can not be applied? When there is a budget deficyt, high public debt, recession, no possibility to borrow money 10. How many arguments in favour of protection of infant industries can u name? Further development of this industry, reduction of unemployment, better situation in military Times, increase od Keynesian’s multiplier 11. Name arguments against protection High taxes for subsides, uncompetetive production, corruption, faulty specialization, trade wars, rise of prices, no scale benefits 12. What is dumping in economics? Dumping – selling below cost of production or below market...
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...the campaign and how these address citizenship issues. As a class we chose the topic Water Aid for our campaign through a voting system where the whole class decided on which topic to campaign for. This issue is important because Water Aid is an organization which doesn’t only try to supply clean and safe water to over 748 million people who don’t have access to it (Statistics gained from: http://www.wateraid.org/uk/what-we-do/the-crisis/water) but it also helps people in over 27 countries build facilities/pumps where fresh – and most importantly clean – water can be accessed from a much shorter distance. Also Water Aid helps with sanitation, general hygiene and basic medical training so that people in lesser developed countries can gain the will and stability to provide for them and not rely on more developed countries for aid. Hopefully with help from Water Aid many more people will not die of easily treatable diseases such as diarrhoea and other water-related diseases. Access to clean water and safe sanitation is an issue globally because over 2.5 billion people around the world don’t have access to adequate sanitation, that’s one in three of the world’s population (statistic from http://www.wateraid.org/uk/what-we-do/the-crisis/statistics). This shows that the issue Water Aid faces is an important and global one because of how many countries actually suffer from not having these basic necessities. It can also be proven as a global issue because of how richer countries...
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...Chapter twenty-six examines how the financial system in America works and analyzes its macroeconomic role. I plan to structure my summary similar to the way chapter twenty-six does. First by talking about different financial institutions and how they work in the U.S. economy. Then by breaking down saving and investment in the national income accounts. Lastly I will explain how government policies affect society’s allocation of resources by manipulating the interest rate. The first thing chapter twenty-six does is explain what a financial system is and why they are needed. A financial system is defined in the book as a group of institutions in the economy that help to match one person’s saving with another person’s investment. Without a financial system, long-term economic growth is not going to happen. Saving and investment allows for higher capital which in return raises productivity and the living standard. Financial institutions allow for the economy's scarce resources to move from savers to borrowers. Savers only provide their money to financial institutions for one reason and that is to gain interest. Interest allows savers to ultimately make money by storing their money in financial markets. Financial markets allow savers to be able to directly supply funds to borrowers. The two main financial markets are the stock market and the bond market. Financial markets are what particularly interest me. Increasing my savings is very important to me and figuring out strategies...
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...successful startups, and think it's therefore the mark of a successful startup to have this happen. But actually the two are not that highly correlated. Lots of startups that cause stampedes end up flaming out (in extreme cases, partly as a result of the stampede), and lots of very successful startups were only moderately popular with investors the first time they raised money. So the point of this essay is not to explain how to create a stampede, but merely to explain the forces that generate them. These forces are always at work to some degree in fundraising, and they can cause surprising situations. If you understand them, you can at least avoid being surprised. One reason investors like you more when other investors like you is that you actually become a better investment. Raising money decreases the risk of failure. Indeed, although investors hate it, you are for this reason justified in raising your valuation for later investors. The investors who invested when you had no money were taking more risk, and are entitled to higher returns. Plus a company that has raised money is literally more valuable. After you raise the first million dollars, the company is at least a million dollars more valuable, because it's the same company as before, plus it has a million dollars in the bank. [1] Beware, though, because later investors so hate to have the price raised on them that they resist even this self-evident reasoning. Only...
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