www.startuphand.org/2023/04/30/the-different-stages-of-funding-in-venture-capital

Startups must have a firm understanding of the financial basics. If you wish to convince investors or banks that your business idea deserves investment, the most important accounting records for startups like income statements (incomes and expenses) and financial forecasts can help.

The financials of startups typically are based on a simple formula. You either have cash on hand or you’re in debt. Cash flow can be a major issue for new businesses and it’s crucial to monitor your balance sheet to ensure that you don’t overextend yourself.

If you’re a new business it is likely that you will need to seek out debt or equity financing to expand your company and ensure it is profitable. Investors will scrutinize your business plan, your projected revenue and costs, as well as the likelihood that they’ll get a return on investment.

There are a myriad of ways you can bootstrap your startup. From obtaining a business card with a 0% APR introductory period to crowdfunding platforms, there are a myriad of options. But, it’s important to take note that the use of credit or debt could harm your personal and business credit score. Therefore, you must always pay off your debts in time.

You can also borrow money from family and friends who are willing to invest. While this may be a good alternative for your startup however, it is important to make the terms of any loan in writing to avoid conflicts and make sure that everyone knows the implications of their contribution to your bottom line. In addition, if you offer an individual shares of your company, they’re considered an investor, and thus need to be governed by the law of securities.