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Books For Startups


Starting a business is a challenging task for entrepreneurs/founders. An entrepreneur who is preparing to launch a startup may be in search of books. In addition, reading books helps to do things right by looking into the experience of innovative and successful entrepreneurs. Given below are the top 11 must-read books relating to startups for any new founder:

1. Zero to One

Zero to One” is the best startup book written by Peter Thiel (co-founder of Paypal). The word meaning of “Zero to One” means starting ground zero and building a new foundation. He explains that one should think out of the box and create a new brand to be the leader in the market. This book is full of unique and challenging ideas that are hard to ignore for a founder who seeks to survive in the market for a prolonged period and can dare their predetermined belief about what startups or small businesses resemble. One of the best lessons learned from this book is how big companies can set up through irregular insights and conflicting beliefs. No doubt, this book is worth reading.

Image shows startup book written by Peter Thiel

2. The Hard Things About Hard Things

This book by Ben Horowitz (entrepreneur of Silicon Valley) is about Ben’s journey to success. “The hard things about hard things” is an easily readable book that offers sincere advice in case of difficult decisions while operating in a startup like funding, running, and managing with a first-hand approach. Read this book if you plan to start a new venture, no matter what your business is. Along with starting a business, it also covers topics relating to buying, selling, and investing in the business. This book is more suitable for SaaS founders.

The hard things about hard things written by Ben Horowitz

3. The Lean Startup

The lean startup” by Eric Ries is one of the bestseller books in the market. According to Ries’ view, every founder should treat a startup as an experiment. He discusses his business failure in the lean startup and how he spent too much time on the initial product launch. This book teaches you how to operate a new startup with minimal resources and effectively optimize capital and human creativity. His “build-measure-learn feedback loop” hypothesis is presented in this book. It focuses on how businesses should stay away from developing comprehensive strategies and use the idea to eliminate market uncertainty. Further, it explains the lean startup approach in detail and persuades why you should use them. Startup entrepreneurs highly recommend this book.

The lean startup written by Eric Ries

4. Who

The book named” Who” was written by Geoff Smart and Randy Street. Hiring is a complex procedure. In many cases, the biggest mistake made in a startup is hiring.” Who” covers simple steps to improve the hiring process. The author suggests A method for optimal hiring. The A method conveys two basic steps- Create a scorecard (it describes what you want a candidate to accomplish, like desired outcomes, and competencies in a particular role) and Test if the candidates fit the scorecard. It teaches you how to interview and evaluate employees, how to avoid single hiring mistakes and ensure you’re hiring the right person in the right roles.

Image of book called Who written by Geoff Smart and Randy Street.

5. Founders at Work

Founders at Work” by Jessica Livingston (founding partner at Y combinator) conveys engaging interviews with founders of most popular startups such as Steve Wozniak (Apple), Caterina Fake(Flickr), Mitch Kapor (Lotus), Max Levchin (PayPal), Sabeer Bhatia (Hotmail). This book shows how these popular technology companies started, how determined and creative they are, how they reacted to situations, and what they did to nurture them. You should read this book if you become an entrepreneur to get an idea about the possibilities and challenges in startups.

Founders at Work startup book

6. Will It Fly

The book named “Will it fly” was written by Pat Flynn. If you are looking for an excellent book for a startup, here it is. Perhaps the most challenging thing about beginning a business is that your idea could drop. “Will it fly” explains your business idea to set yourself up for success and suggest a few tips for running a business in the right direction. The author provides case studies and action-based examples that ensure you get a good idea before you waste your time, money, and effort. You can also discover how to verify and test your theory to see if it can work, how to create a business that fits your skills and goals, how to think when you assess the current market, and so on.

Image of Book called Will it fly

7. The Art of the Start

Guy Kawasaki wrote this book. He talks about essential topics for startup founders like finding a business idea, pitching potential investors, and preparing business models. This book The Art of the Start also covers topics like the art of launching, positioning, socializing, and advertising your startup. Further, it also gives helpful advice for those who intend to launch a new product/service. So whether you’re an entrepreneur or want to add more entrepreneurship within any firm, this book will surely help you get on the right path.

The art of start book

8. E-myth Revisited

The E-myth Revisited” is one of the best books for startups, written by Michael E Gerber, focusing on the myths entrepreneurs have about building a business. He believes that running a business and having technical skills are two different things. Therefore spending no time on the business and spending too much time on business is why most startups fail within starting years. The author explains his growing startup from an entrepreneurial perspective in this book. He also provides powerful insights for running a business confidently and efficiently. He suggests that business people should play the role of three people equally-. They are Entrepreneur, Manager, and Technician. And focus on time to make systems dependent (Your business is the system, not the product you’re selling to consumers). In short, this book is a very entertaining and valuable guide for readers.

The E Myth Revisited startup book

9. Crossing the Chasm

Crossing the Chasm” is a marketing book by  Geoffrey A Moore (Software startup founder).  The book covers the marketing of high-tech products during the early start-up stage. He also explains a gap or chasm between innovators and the mainstream market, so the author dedicates various steps that a high-tech company requires to negotiate through this chasm. According to Moore, marketers should consider only one group of consumers at a time. Besides, he offers outstanding strategies and advice for taking your business from early adopters to mainstream consumers. The success of this book led to a series of follow-up books and consulting companies.

Image of book called Crossing the Chasm

10. Built to Sell

Built to Sell” is a fun read book by John Warrillow, sharing his personal experience about selling his business. The business lesson that Warrillow teaches is translated into a simple story that makes for quick reading. He shows precisely what it takes to create a strong business that can flourish long into the future. He also talks about essential tips for creating value for the business and practical insights for selling a successful business product in the market.

Image shows Built to sell book

11. Rework

The book Rework is written by Jason Fried. concept of Rework, like other business books, teaches entrepreneurs the art of productivity rather than corporate strategy and management. The book’s central theme is employing competition, productivity, advancement, and personal evolution to expand one’s business. It dispels business fallacies, offers entrepreneurs a fundamental viewpoint, and it aids in seeing that challenges are frequently used as justifications. Even if many of the book’s other business-related observations and recommendations are unconventional, they have a significant influence.

Image of startup book called Rework written by Jason Fried

Final Thought

Knowledge is power, and the best place to gather knowledge is through books. Reading startup books helps to increase our imagination and push the business forward. Starting a business may be a terrifying, time-consuming endeavor. However, it might be helpful to occasionally get outside your brain. Also, remember that many successful individuals have been in your current position. One of the books on this list could contain advice for you no matter what problem you’re having running your company.

The most crucial thing to learn from startup business books is to let go of your preconceived notions and be receptive to new information. Make an effort to connect your company with the book’s setting. But if you are too lazy in reading books, you can get more startup guides from our experts. So, without wasting much time, book a slot with us. Scaalex is a team of top domain experts and financial consultants. We worked closely with 270+ startups to build financial projections, valuation reports, business plans, and funding advisories. If you are among the startups lacking adequate financial insights, reach out to us to attain exceptional execution and fundraising results!


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Introduction to Debt to Equity Ratio

Debt to Equity Ratio is one of the key financial metrics for startups. In this guide, we will explain what the Debt to Equity ratio is, its formula, the factors affecting it, and its limitations. We will also explore the ideal D/E Ratio and the pros and cons of both high and low ratios. Lastly, we will share tips on how to improve the D/E Ratio.

Before diving into the details, let’s understand the concept of capital structure. Capital structure refers to how a company finances its operations through debt and equity. Debt refers to the money borrowed from external sources such as banks, while equity is the owner’s investment in the business. This ratio shows how much debt a company has concerning its equity.

What is Debt to Equity Ratio?

Debt to Equity ratio is a financial ratio that measures the proportion of a company’s total liabilities to its shareholders’ equity. Simply, it shows how much the company relies on debt to finance its operations. The higher the ratio, the more the company has borrowed and is burdened with debt.

D/E Ratio Formula

The formula for calculating D/E Ratio is straightforward, and it is calculated by dividing a company’s total liabilities by its shareholders’ equity. The formula is as follows:

Debt to Equity Ratio = Total Liabilities / Shareholders’ Equity

Understanding the Factors Affecting Debt to Equity Ratio

Several factors affect a company’s Debt to Equity Ratio. Some of the factors are:

Industry Norms

The industry in which a company operates plays a significant role in determining its Debt to Equity Ratio. Certain industries require high debt to finance their operations, while others may require less.

Business Life Cycle

The stage of a company’s life cycle also plays a significant role in determining this ratio. A startup may have a higher ratio as it relies on debt to finance its operations. A mature company, on the other hand, may have a lower ratio as it has established a steady revenue stream and can rely on equity financing.

Interest Rates

Interest rates affect a company’s borrowing cost, which, in turn, affects its Debt to Equity Ratio. A company may borrow more if interest rates are low, resulting in a higher ratio. Conversely, a company may borrow less if interest rates are high, resulting in a lower ratio.

Example of Debt-to-Equity Ratio Calculation

Let’s understand its calculation with an example. Suppose a company has total liabilities of $500,000 and shareholders’ equity of $1,000,000.

Debt to Equity Ratio = Total Liabilities / Shareholders’ EquityDebt to Equity Ratio = $500,000 / $1,000,000Debt to Equity Ratio = 0.5

In this case, the Debt to Equity Ratio is 0.5, meaning the company has $0.50 of debt for every $1.00 of equity.

Ideal D/E Ratio

It varies across industries and companies. Generally, a ratio of 1:1 is considered healthy, indicating that the company has an equal amount of debt and equity. However, some industries, such as utilities, may have higher ratios, while others, such as technology companies, may have lower ratios.


While this ratio is a useful financial metric, it has limitations. Some of the limitations are:

Industry Differences

As mentioned earlier, different industries have different Debt to Equity Ratio norms. Comparing the ratios of companies in different industries may not provide an accurate picture.

One-Dimensional View

It is a one-dimensional view of a company’s financial health, and it does not consider other financial metrics such as profitability, cash flow, and liquidity.

Different Accounting Methods

Different accounting methods can affect this ratio. For example, using the LIFO method for inventory valuation can result in a lower equity value, thereby increasing the ratio.

Pros and Cons of High Debt to Equity Ratio


● A high ratio indicates that the company is relying on debt to finance its operations, which can lead to tax benefits.

● Debt financing is cheaper than equity financing as interest payments are tax-deductible.

● It also shows that the company is taking advantage of growth opportunities.


● A high ratio indicates that the company is heavily dependent on debt, which can be risky during economic downturns.

● High debt levels can lead to higher interest payments, affecting the company’s profits.

● A high ratio can result in a lower credit rating, making it harder for the company to borrow in the future.

Pros and Cons of Low Debt to Equity Ratio


● A low ratio indicates that the company is less reliant on debt, reducing the default risk.

● A low ratio can lead to higher credit ratings, making it easier for the company to borrow in the future.

● A low ratio can result in lower interest payments, improving the company’s profitability.


● A low ratio can indicate that the company is not taking advantage of growth opportunities.

● Equity financing is costlier than debt financing as it involves sharing ownership, which can dilute the existing shareholders’ stake.

● Also a low ratio can also indicate that the company is not using leverage to its advantage.

How to Improve Debt to Equity Ratio

If a company has a high ratio, it can take the following steps to improve it:

● Pay off debt: The company can use its profits to pay off debt, thereby reducing the ratio.

● Issue new equity: A company can issue new equity to raise funds and reduce its reliance on debt.

● Renegotiate debt terms: Also a company can renegotiate the terms of its debt to reduce interest rates or extend the repayment period.

If a company has a low ratio, it can take the following steps to improve it:

● Take on more debt: The company can take on more debt to finance growth opportunities.

● Buy back shares: Similarly company can buy back some of its shares to increase its equity value.

● Issue less equity: Also the company can issue less equity to reduce dilution.


Debt to Equity Ratio is a crucial financial metric that measures a company’s reliance on debt to finance its operations. It is affected by several factors, including industry norms, business life cycles, and interest rates. While a high ratio can lead to tax benefits and growth opportunities, it can also be risky during economic downturns. On the other hand, a low ratio indicates that the company is less reliant on debt, which reduces the risk of default. To improve this ratio, companies can pay off debt, issue new equity, renegotiate debt terms, take on more debt, buy back shares, or issue less equity.

Now that you have a better understanding of D/E ratio, it’s time to explore the other essential startup financial metrics.


What is a good debt-to-equity ratio?

The optimal ratio can vary depending on the industry. However, a ratio of 1:1 or lower is considered good. This means that the company has equal debt and equity financing, indicating that it is not overly reliant on borrowed funds to finance its operations.

How does the debt-to-equity ratio vary across different industries?

The D/E ratio varies across industries due to variations in capital requirements, operating risks, regulatory environment, revenue stability, and financial goals.

What is total debt?

Total debt is the money a company owes to creditors and lenders, including short-term and long-term debt obligations. This may include bank loans, bonds, lines of credit, leases, and other forms of borrowing. Total debt is typically reported on a company’s balance sheet as a liability.

What does a high debt-to-equity ratio indicate?

A high ratio is considered risky for lenders and investors as it indicates that a company has a relatively large debt compared to equity.

What does a low debt-to-equity ratio indicate?

A low ratio indicates that a company has a relatively small amount of debt in proportion to its equity. It means the company has more owned capital than borrowed capital.


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Understanding Startup Cashflow


Image showing business growth, cash flow, revenue.

Cash flow is the lifeline of any business, especially for startups that are still testing the waters. With the lack of cash flow management, established businesses as well as startups can face severe financial difficulties. This could lead to dwindled revenue as well as a complete shutdown of their business. 

In this blog post, let’s break down the important cash flow elements for a thorough understanding.

What is Cash Flow?

Cash flow refers to the cash amount that flows in and out of an organization during a particular duration. Cash inflows include cash received from customers, interest earned, and any other sources of cash whereas Cash outflows refer to payments made to suppliers, salaries and wages, rent, taxes, and other expenses.

How Does it Work?

Cash flow works by tracking all the capital that flows in and out of a business over a specific period. This period can depend on a monthly or annual basis. 

For firms to maintain a positive cash flow, they need to ensure that their cash inflows are greater than their cash outflows. The business will experience a negative cash flow if the cash inflows are less than the cash outflows. This could lead the business to severe financial difficulties. 

Being an essential finance and accounting component, cash flow measures the net amount of cash and cash equivalents flowing into and out of a business. Positive cash indicates a growth in the company’s liquid assets. This allows the firm to settle debts and invest in growth opportunities. 

Below are the key details of how cash flow works and its relevance to a startup:

  • Cash flow can be calculated using either the direct or indirect method.
  • The direct method calculates cash flow by tracking the actual inflows and outflows of cash, while the indirect method starts with net income and makes adjustments for non-cash transactions and changes in working capital.
  • The cash flow statement provides a detailed picture of what happened to a business’s cash during a specified period, known as the accounting period. 
  • The statement demonstrates an organization’s ability to operate in the short and long term, based on how much cash is flowing into and out of the business. 

How To Analyze It?

To analyze cash flow, businesses must create a cash flow statement that outlines the inflows and outflows of cash over a specific period. 

The cash flow statement helps businesses to identify their cash position and enables them to make informed decisions regarding their finances. Businesses can use various tools and software to analyze their cash flow and make data-driven decisions.

How to calculate cash flow?

1.) Calculate your revenue: Calculate your revenue by multiplying the number of services you provided by the price per service.

2.) Subtract direct costs: Subtract any direct costs associated with providing your services. This may include things like materials, equipment, or any other costs that are directly related to providing the service.

3.) Subtract overhead costs: Subtract your overhead costs, which are the costs that are not directly related to the provision of your services. This may include things like rent, utilities, and administrative expenses.

4.) Add back non-cash expenses: Add back any non-cash expenses, such as depreciation, that were subtracted in step 3.

5.) Subtract your taxes: Subtract your taxes from the result of the previous step.

Type of Cash Flow

Here are the three types of cash flows:

Operating Cash Flow (OCF)

Operating cash flow is the amount of cash generated by the core operations of the business. It includes revenue generated from the sale of goods and services, minus all operating expenses incurred during the same period. 

Some examples of operating expenses include salaries and wages, rent, utility bills, inventory costs, and marketing expenses. This cash flow measure provides insight into the financial performance of a business’s core operations.

Investing Cash Flow (ICF)

Investing cash flow is the cash inflow and outflow related to the purchase and sale of long-term assets, such as property, plant, and equipment.

This measure includes the money spent on capital expenditures and the proceeds from selling long-term assets. For example, if a business purchases a new piece of machinery, this will be considered an outflow of cash. On the other hand, if a business sells a property, it will be considered an inflow of cash.

Financing Cash Flow (FCF)

Financing cash flow measures the inflow and outflow of cash related to the financing of the business. This includes money received or paid for issuing and retiring debt, issuing and buying back shares, and paying dividends. 

Financing cash flow is important to track as it shows how a business is being funded and whether it’s relying on debt, equity, or dividends.

It’s important to note that while tracking each type of cash flow is crucial, it’s also important to understand the overall cash flow position of the business. Positive cash flow indicates that a company’s liquid assets are increasing, enabling it to settle debts, reinvest in the business, pay dividends to shareholders, or return capital to investors. Conversely, negative cash flow indicates that a company is spending more money than it’s generating, which can lead to financial difficulties and possible insolvency.

Managing a Startup Cash Flow

Managing startup cash flow is crucial for the success of any business. Startups can manage their cash flow by creating a cash flow budget, negotiating payment terms with suppliers, collecting receivables on time, and reducing unnecessary expenses. Startups need to stay on top of their cash flow to ensure that they have enough cash to cover their expenses and invest in growth opportunities and expand their business.

For startups, managing cash flow is critical as they often have finite financial resources. Startups must focus on creating a positive cash flow by increasing their cash inflows and reducing their cash outflows. They can do this by increasing their sales, reducing expenses, and managing their cash effectively. 

Here are some tips for managing startup cash flow:

1.) Create a Cash Flow Forecast

A cash flow forecast is a prediction of your company’s future cash inflows and outflows. Use this forecast to plan your spending and make sure you have enough cash on hand to cover your expenses.

2.) Prioritize Your Expenses

Determine which expenses are essential and which can be delayed or reduced. Focus on the critical expenses that keep your business running, such as rent, salaries, and supplies.

3.) Delay Payments When Possible

Negotiate payment terms with your suppliers to extend payment deadlines. This can give you extra time to collect revenue from your customers.

4.) Collect Payments Quickly

Send invoices promptly and follow up on late payments. Consider offering discounts for early payment or charging late fees for overdue accounts.

5.) Manage Inventory Carefully

Keep a close eye on inventory levels to avoid overstocking or stockouts. Overstocking ties up cash, while stockouts can result in lost sales and missed opportunities.

6.) Explore Financing Options

Look into financing options like lines of credit, small business loans, or crowdfunding to help cover expenses during times of low cash flow.

7.) Focus on Revenue

Acquiring more customers to pay for the products/service is the best way to ensure they don’t run out of cash. And yet, many startups seek to attract new customers with free trials. That won’t generate revenue. A better approach is to charge customers a small fee to take part in a test and offer them a discount if they end up purchasing at the end of a trial period. They will be willing to pay if you have a good product.

8.) Monitor Regularly

Keep track of your cash flow on a regular basis and adjust your spending as necessary. Use accounting software or a spreadsheet to help you stay organized and on top of your finances.

Importance of Cash Flow for Startups

Cash flow is essential for startups as it helps them manage their finances effectively. Startups need to ensure that they have enough cash to cover their expenses and invest in growth opportunities. A positive cash flow can help startups secure funding and attract investors, while a negative cash flow can lead to financial difficulties and ultimately failure. 

Here are some key points to explain why cash flow is essential for any business:

1. Helps Businesses Remain Solvent

Cash flow is a fundamental aspect of a business’s solvency. It is essential to ensure that a company has enough cash on hand to meet its financial obligations. Without sufficient cash flow, a business may not be able to pay its suppliers, employees, or lenders, leading to default, bankruptcy, and even closure.

2. Enables Better Decision-making

Cash flow statements provide a detailed breakdown of a company’s inflows and outflows of cash. By analyzing this data, business owners and managers can make more informed decisions about how to allocate resources and manage their finances effectively. A thorough understanding of a company’s cash flow can help business owners identify areas where they can reduce costs, increase revenue, or improve profitability.

3. Helps Secure Financing

Investors and lenders often look at a company’s cash flow statement when deciding whether to invest or lend money to the business. Positive cash flow indicates that a company is generating enough cash to cover its expenses, pay its debts, and potentially invest in growth opportunities. Investors and lenders are more likely to finance companies that have strong cash flow, as it demonstrates a company’s ability to manage its finances effectively.

4. Facilitates Planning

Cash flow projections are crucial for business planning. By forecasting future cash needs, businesses can prepare for potential shortfalls or opportunities to invest in growth. It can also help businesses manage seasonal fluctuations in revenue, anticipate changes in demand, and plan for unforeseen expenses.

5. Helps Manage Risk

Cash flow management is an essential risk management tool for businesses. By closely monitoring cash flow, businesses can identify potential financial risks and take corrective action to mitigate those risks before problems escalate. For example, if a business sees that its cash reserves are getting low, it may decide to delay purchasing new equipment until it has generated sufficient cash flow to cover the expense.

In a Nutshell

Managing cash flow is critical for the success of startups. Startups need to create a positive cash flow by managing their finances effectively, reducing expenses, and increasing their cash inflows. By analyzing their cash flow regularly, startups can make informed decisions and avoid financial difficulties. With the right strategies in place, startups as well as established businesses can achieve financial stability and grow their businesses in the long run.

Learn about other key startup financial metrics: Cash Burn rate, Debt-to-Equity ratio

Optimize Your Startup’s Cash Flow: Expert Services for Financial Success

Unlock the potential of your startup’s cash flow with our specialized services. From financial modeling and business plan writing to due diligence and valuation reports, we’re here to ensure your cash flow strategy aligns with your growth ambitions. Explore our services now and pave the way to a thriving financial future. Book A 30-minute free consultation call with our experts!


1.) What are the 3 types of Cash flow?
The 3 types of cash flows are Operating, Investing, and Financing cash flows.

2.) What is free cash flow?
Free cash flow is the cash a company generates from its operations, after accounting for capital expenditures needed to maintain and expand the business.
Free Cash Flow measures the amount of cash a company has left over after it has paid for its operating expenses and investments in property, plant, and equipment. This money can be used for various purposes, such as paying dividends to shareholders, repaying debt, or reinvesting in the business.

3.) How are cash flow different than revenues?
Revenue is the total amount of money a company earns from the sale of its products or services.
Cash flow, on the other hand, is the amount of cash that flows in and out of a company over a specific period of time. They are is calculated by subtracting cash outflows (such as payments for expenses and investments) from cash inflows (such as payments from customers and investments).

4.) What are the important points of making cash flow for start-up businesses?
The important points of making cash flow for start-up businesses include:

  • Wages and salaries
  • Payment to suppliers
  • Interests on loans and overdraft
  • Tax on profits
  • Repayment on loans

5.) What are the limitations of cash flow forecasting?
The limitations of cash flow forecasting include:

  • It cannot gauge future market conditions
  • Inflation
  • Sales demand shifts

Now that you have a better understanding of cash flow, it’s time to explore the other essential startup financial metrics.


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Startup Seed Funding


Seed funding is a crucial stage of a startup’s development, providing the necessary capital to bring an idea to life. Seed funding is the initial investment that a startup receives to get off the ground and cover costs associated with development, marketing, and operations. However, securing seed funding requires entrepreneurs to understand the different fundraising stages, create a compelling pitch, and identify the right investors to approach.

In this blog, we’ll guide you through each stage of seed funding and also discuss its importance, the types of investors you can approach, the factors that investors consider when evaluating startups, how to get seed funding for your startup, and so on. Let’s get started then.

What Is Seed Funding?

Seed funding also known as seed money/seed capital/seed investment refers to the initial capital that a startup receives from investors or venture capitalists to launch and develop their business idea. This type of funding typically occurs during the early stages of a company’s growth, when the business model is still in development and the product/service is not yet fully functional.

Seed funding is usually used to cover the costs of product development, marketing, and operations, and can range from a few hundred thousand dollars to a few million dollars, depending on the needs of the startup.

How To Get Seed Funding?

Obtaining funds to launch a product/service is critical for many startups. To cover this risk, they start approaching external sources. Seed funding, also known as seed money/seed capital/seed investment, is the first key round of funding early-stage startups. Generally, the process may take 3-6 months. It may vary according to startup stages, intended to finance the initial stage operations of startups such as product development, market research, and technology development, contributing to a strong foundation for successful startups. All you need is a practical idea with a strong business plan and management team to convince investors that you have a product prototype or proof of concept for your business. Once the startup establishes a user base and persistent revenue, they can proceed to fund rounds – Series A, B, C, and D. But the founder must have an exact picture of when and how to raise seed funding effectively.

Different Series Of Funding

Series A:

Series A round is used to optimize its user base and product offerings. The venture capitalist is the most common source of funding for series A. The expected capital raised is between $2-$15 million.

How Series A funding works?

During a Series A funding round, the startup’s founders and existing investors will seek out venture capital firms or other institutional investors to provide additional funding. The investors will evaluate the startup’s growth metrics, business plan, and management team before making a decision to invest.

Series B:

In this stage, startups are ready for their development stage. They have substantial knowledge about their product/market and decide to expand to support the company’s growth to the next level. It can acquire up to $7 million to $10 million for funding.

How Series B funding works?

The funding provided in a Series B round is typically larger than that of a Series A, and the valuation of the company is usually higher as well ( between $30 million and $60 million). This allows the company to continue scaling its operations, expanding into new markets, and investing in research and development. The funding may also be used to acquire other companies, hire key executives, or strengthen the company’s balance sheet. Both Series A and B have some similarities in terms of the funding process and the investors involved, with the main difference being additional venture capital firms taking part in bigger investments.

Series C:

Series C funding occurs when a company has already achieved significant scale and is looking to continue growing rapidly. This funding helps to develop new products, expand into new markets or even acquire new companies. This stage sets a goal of raising $26 million on average.

How Series C funding works?

In a Series C funding round, institutional investors such as venture capital firms, private equity firms, hedge funds, and corporate investors are typically involved. These investors are looking for high-growth startups that have already established a significant market presence.
Given the amount of capital required in a Series C funding round, investors often look for opportunities to deploy large amounts of capital into a single investment. This means that the investors involved in this funding round are often larger and more sophisticated than those involved in earlier rounds of funding.

Series D:

Most startups finish raising capital with series C. But when startups can’t achieve targeted goals, they may choose to raise Series D round. It is also known as a Down round.

Sources Of Seed Funding

1. Bootstrapping

Bootstrapping is a self-starting process where founders put their wealth or savings without external help. A small amount of money is set apart for the bootstrapping process at the time of starting a venture. Generally, founders may rely on internal cash flow and business revenue by substantially increasing their valuation or seeking funds from friends and family. It is an inexpensive form of funding because they need not want to return borrowed money from others. After all, it brings financial pressure on them to gain more profit. GoPro, Whole Foods, and Under Armour are some of the companies that have funded through bootstrapping.

2. Corporate seed funds

Another vital source of funding is Corporate seed funds. Big tech companies like Apple, Google, FedEx, and Intel regularly provide them with seed money if they think that startups can be a source of profit or talent for their pool. This funding can contribute to lucrative acquisitions in the future and also brings excellent visibility for startups.

3. Incubators

Business incubators are collaborative programs run mainly by private and public entities that provide all sorts of services ranging from management training, expert advice, office space, and venture capital financing to those at the idea stage. There is no need time limit to the duration of the services provided by Incubators. They invest a small amount of funding and usually don’t take equity from startups. Nevertheless, it helps to shape the business idea perfectly. The main difference between incubators and accelerators is that incubators focus on early-stage startups, whereas accelerators focus on scale-up startup growth.

4. Crowdfunding

Crowdfunding is the fastest way to raise a small amount of finance from a large number of people. The word “crowd” in crowdfunding refers to the individual investors or enterprises that provide finance using web-based platforms and social networking sites with no upfront fees. It provides funds needed to get a startup off the ground in return for a potential profit or reward. It would be an alternative finance option if you struggled to get bank loans or traditional funding. Equity crowdfunding, Debt crowdfunding, Donation-based crowdfunding, and Reward-based crowdfunding are some of the types of crowdfunding.

5. Accelerators

Accelerators (also known as seed accelerators) will be the startup’s first external finance in most cases. It’s a set timeframe program designed to provide sound advice, mentorship, and resources to support startup growth on a public pitch day or demo. A good startup accelerator scales up business growth for a certain percentage of equity. Y Combinator, TechStars, and Brandery are some of the well-known accelerators in India.

6. Angel investors

Angel investors (also known as seed investors, business angels, and angel funders) are high-net-worth individuals who provide capital in return for ownership equity or convertible debt. Apart from financing, it brings expert advice, stable growth, and a greater return rate. They often save startups at the risk of failing; that’s why they are called Angel investors and invest in small amounts and take more risks when compared to venture capitalists. They may conduct detailed research, competitive analysis, and several rounds of meetings before investing. Angel investors who earned at least $2,00,000 in income or a net worth of $1 million in assets are considered accredited investors by SEC(Securities and Exchange Commission). AngelList, Lead Angels, and Indian Angel Networks are some of the significant Angel networks in India.

7. Venture Capitalist

Venture Capitalist (VC) is the most common method of seed funding. VCs are institutions that finance a significant amount of capital from large companies or corporations. Beyond the budget, it offers services such as industry insights, mentorship, support, and connections. It’s not an easier task to pitch VCs as they tend to invest in startups that show brilliant business plans, strong presentations, and wide-ranging market and growth potential. They usually demand a high equity stake and participation in management decision-making. The average venture capital investment may range from $1 million to $100 million and involves narrow investment criteria.

8. Friends & Family

Friends and family are one of the common sources of seed funding for most early-stage startups. They are often willing to invest in the entrepreneur’s vision and can provide the initial capital needed to get the business off the ground. Seed funding from friends and relatives is typically less formal than traditional seed funding sources, and the terms of the investment can be more flexible. However, it is important to approach them with a solid business plan and clear expectations regarding the investment, in order to avoid potential conflicts down the line which could affect personal life.

State Government’s Seed Funding Schemes:

  • Kerala Govt implemented the Seed Support Scheme to provide monetary help to startups (having an upper limit of INR 15 lakhs ). It aimed to promote innovation-based enterprises’ creation and development, thereby encouraging growth in Kerala state through providing venture creations and increased job opportunities. Kerala Startup Mission enforced this scheme.
  • Govt of Karnataka provides seed funding under the “idea2PoC” program of the Karnataka Startup policy. It aims to provide seed funding to ideas or concepts which are yet to validate the proof of concept. It’s granted only one time, having an upper limit of INR 50 lakhs, and provided in installments over a maximum period of 2 years.
  • Govt of Haryana granted a seed fund of INR 3 lakhs for the authenticity of ideas, prototype development, traveling costs, and expenses for carrying out the initial activities of startups.
  • The Government of Bihar will give a seed grant of up to INR 10 lakh as an interest-free loan for furnishing authenticity of ideas, prototype development, assistance towards traveling costs, and almost all expenses required for setting up startups within ten years.
  • Seed Capital Fund Scheme turned an essential component of the Sher-e-Kashmir Employment and Welfare Programme for Youth (SKEWPY) into the Govt of Jammu and Kashmir (JK) initiative. It is a one-time grant that aims to provide seed funds up to INR 7.5 lakh to contribute to employment opportunities among youth and make business plans profitable.

Getting Seed Funding: Steps Involved

Step 1: Determine What Type of Funding You Need

Before seeking seed funding, it is important to determine the type of funding that is most appropriate for your startup. Seed funding can be in the form of equity, convertible notes, or simple agreements for future equity (SAFEs). Each type of funding has its own advantages and disadvantages, so it’s important to consider which option aligns best with your business goals and needs.

Step 2: Determine How Much to Raise

Once you have decided on the type of funding you need, the next step is to determine how much capital to raise. This will depend on the stage of your startup, your business goals, and your financial projections. You should create a detailed financial plan that outlines your expected expenses and revenue projections for the next few years.

Step 3: Create a Pitch Deck

A pitch deck is a visual presentation that outlines your business idea, market opportunity, financial projections, and team. It should be concise, engaging, and persuasive. A pitch deck typically includes slides that cover the following topics:

  • Problem: Define the problem your product or service is solving.
  • Solution: Describe your product or service and how it solves the problem.
  • Market: Define the size of the market opportunity and target customers.
  • Business model: Explain how your company plans to generate revenue.
  • Competition: Describe your competitors and how your product or service is unique.
  • Team: Introduce the key members of your team and their expertise.
  • Financial projections: Outline your revenue projections, expenses, and funding needs.

Step 4: Meet With Investors

Once you have a pitch deck, you can start meeting with potential investors. This can include angel investors, venture capitalists, and even family and friends. You can also attend networking events and pitch competitions to connect with investors.

When meeting with investors, it’s important to be prepared and professional. You should be able to answer questions about your business plan, financial projections, and team. It’s also important, to be honest, and transparent about any risks or challenges your business may face.

Step 5: Negotiate Terms

If an investor is interested in funding your startup, you will need to negotiate the terms of the investment. This can include the amount of funding, equity stake, and other key details. This is typically done through a term sheet, which outlines the main terms of the investment.

It’s important to seek legal advice when negotiating the terms of the investment to ensure that you fully understand the implications of the agreement.

Step 6: Finalize The Deal

Once the parties agree on the terms, the investor will provide the funding to the startup in exchange for an equity stake. At this point, the parties must sign legal documents to finalize the deal.

We Help You Raise Funds Effectively

Looking to raise funds for your startup? Our financial modeling service can help. We work with you to create a detailed financial model, identify sources of funding, develop a pitch deck, and provide ongoing support throughout the fundraising process. Our expertise and guidance can help you increase your chances of securing seed funding and kick-starting your business. Connect with our experts to learn more about our services.

Seed Funding FAQ

1.) How much is seed funding?
Seed funding round amount typically ranges from $500K to $2M. But this can vary depending on factors like location, industry, the track record of the startup founder, and more.

2.) What documents are needed for seed funding?
The specific documents you would need to raise seed funding can vary depending on the investor and industry. But some common documents that you will need are the pitch deck, business plan, financial statements, and projections.

3.) What are the requirements for seed funding for startups?
The requirements for seed funding can vary depending on the investor, but some general requirements include a business idea, an MVP, a capable team, and an idea of your target market.

4.) What comes after seed funding?
After seed funding, startups typically move on to their next round of funding, which is Series A. This round is typically aimed at helping startups expand their operations and develop their products or services further.

5.) How is Seed Funding Different From Series A, B, and C?
Seed funding is the initial stage of funding for a startup, while Series A, B, and C are subsequent rounds of institutional funding used to expand and scale the business. Funding amounts increase with each round, and investors become more involved in the company’s operations as it grows.


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Key Financial Metrics

Image showing illustration of startup founders tracking the financial metrics of their startup

As a startup founder, you may be familiar with the basics of business finances and financial metrics like income, margin, balance sheet, etc. But it’s easy to overlook some key financial indicators that could easily mean the survival or failure of your business. Here are 5 key financial metrics that all founders should track to ensure their business is on the right path.

1.)Cash Flow

The ability to pay your expenses is a basic financial stability requirement, which means keeping an eye on your cash flow is critical. Cash flow is the net change in your cash and cash equivalents over a period of time, so tracking the amount of money coming in and out of your business is important. That way, you can identify any potential issues with cash shortages or delays in collecting payments.

2.)Burn Rate

Another important metric to watch is your business’s burn rate. It is the rate at which your business is spending its available cash. By tracking the burn rate, you can gauge how quickly your business is running through its available capital. It will in turn affect its ability to stay afloat over the long run.

3.)Revenue And Expenses

It’s important to track the revenue and expenses of your business. Both for the purposes of staying on top of cash flow and for understanding overall profitability. Pay attention to trends in your spending and income. So you can determine where you need to cut costs or identify new and profitable opportunities.

4.)Debt-to-Equity Ratio

As a startup founder, you need to be aware of how much debt your business carries. The debt to equity ratio indicates the amount of debt your company has relative to its equity. If your debt-to-equity ratio is getting too high, it may be time to consider getting new sources of equity or renegotiating terms on your debt.

5.)Return on Investment

Finally, track return on investment (ROI) on major investments or projects, so you’ll have a better sense of what activities are adding value to your business. This can help you make decisions on where to focus or invest your time or resources in the future.


In summary, tracking these 5 key financial metrics can help startup founders get a better handle on their business’s finances and ensure the long-term success of their venture. Keeping an eye on cash flow, burn rate, revenue and expenses, debt-to-equity ratio, and return on investment will help you stay ahead of potential financial problems and make smart decisions for your business.

Read related topics: Key SaaS metrics for startups , Understanding Client concentration


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SVB Collapse

What was Silicon Valley Bank ?

Silicon Valley Bank is a state-chartered commercial bank headquartered in Santa Clara, California, that failed on March 10, 2023, and its assets are now under the care of the Federal Deposit Insurance Corporation (FDIC). It was the 16th-largest bank in the U.S. and Silicon Valley’s largest bank based on deposits. The bank mainly comprises the primary business of SVB Financial Group, a publicly traded bank holding company with other subsidiaries. 

History Of Silicon Valley Bank

Silicon Valley Bank was founded in 1983 in San Jose, California, by Bill Biggerstaff, Robert Medearisa, and Robert Smith. 

The company went public in 1988 and eventually grew to be one of the largest commercial banks in the U.S. It saw major growth during and after the pandemic between 2019 and 2022, where it rose from the 34th largest bank to the 16th. 

Why did Silicon Valley Bank collapse?

As Silicon Valley Bank was founded, the banking industry needed a better understanding of startups, especially those that didn’t generate revenue. Startups wait for income, so the bank structured its loans to manage risk based on business models.

 The bank connected customers to its extensive venture capital, law, and accounting firm network. Its primary strategy was collecting deposits from businesses financed through venture capital. It was then expanded into banking and financing venture capitalists by adding services to allow the bank to keep clients when they mature from their startup phase. Initially, startup founders seeking bank loans pledged about half their shares as collateral. After a few years, the failure rate dropped to about seven per cent, reflecting low failure rates and founders’ willingness to pay back their loans. The bank covered the losses by selling the shares to interested investors. Eventually, it became typical for venture capital firms’ term sheets to the requirement of startups to create a bank account at SVB specifically.

The significant increase in interest rates is a recurring theme in the failure of SVB. The U.S. Federal Reserve has quickly raised its benchmark policy rates from the historically low levels of last year to combat inflation. This expected to reach a 40-year high in 2022 and cause the economy to slow down and investments to decline.

Investors that pour money into riskier investments when cheaper typically have a poor risk tolerance in an environment with high interest rates. Most of SVB’s clients, startups, saw a big decline in their investments as interest rates kept rising.

Image showing largest bank failures including Silicon valley bank in the U.S as of 2023,by total assets
Stats showing largest bank failures in the U.S by total assets (As of 2023)

The Reason The Bank Forced To Sell Its Holdings At a Loss:

 Major venture capitalists (VCs), who had sizable accounts with the bank and were SVB’s clients, provided the majority of the funding for early-stage firms. SVB’s deposits increased thrice to $189.20 billion in 2021 amidst the VC industry boom. However, since the IPO Boom ended in 2022, there weren’t many withdrawals. The bank’s loan operations could not keep up with the deposit surge. As a result, the bank bought over $80 billion in mortgage-backed securities (MBS) with these deposits for its hold-to-maturity (HTM) portfolio – with an average yield of 1.56%.

These MBS lost value due to the US central bank’s continued raising interest rates. This resulted from investors’ ability to purchase long-term “risk-free” bonds from the Fed for a 4-5% yield. Nine times in 2022, the US Federal Reserve raised interest rates steadily to rein in inflation. Bond yields often increase as interest rates rise. Due to their safety, yields become more appealing than equities after crossing a certain threshold. Bonds became more appealing to investors due to growing interest rates and yields, which decreased the value of the bonds owned by banks. Bond prices and yields have the opposite relationship.

The graph shows the distribution of  different funding types of silicon valley bank.

Why did they rush to the bank?

It is hard to nail down the precise cause of a run; crowd psychology is at play. Yet after the bank announced a capital raise and the sale of a large fraction of securities at a loss, concerns might have surfaced. The bank catered to startups in the technology and venture capital. Because they were corporate deposits, several exceeded the $250,000 insurance cap the Federal Deposit Insurance Corp set. SVB’s uninsured deposits exceeded more than $150 billion at the previous year’s end.

Several SVB clients started withdrawing money from the bank to fulfil their liquidity needs. Interest rates forced initial public offerings, another method of raising capital for startups, to come to a screeching halt in the US. To continue allowing withdrawals, the lender was compelled to look into its alternatives for raising money. In the hours before the bank’s collapse, the run worsened as several startups attempted to withdraw money. Many failed while others were successful, which exacerbated the fear and compelled the FDIC to take charge.

SVB Might Have Been Able To Hold Onto Paper Losses Until Rates Fell

The bank might have theoretically gotten by letting securities mature and getting its money back. It’s possible that until things changed, deposits were being released rather steadily. But, after a spike in deposit withdrawals, it didn’t have that time.

The bank then faced a tidal wave of $42 billion in deposit withdrawal requests last week. It failed to raise funds needed to cover the outflows, prompting regulators to respond with force.

Unsuccessful fundraising effort

SVB liquidated a $22 billion bond portfolio made up primarily of US Treasuries, whose values had fallen due to the Fed’s tightening of monetary policy, in an effort to pay for the redemption. The lender was compelled to record a $1.8 billion loss. SVB attempted to close the gap by financing $2.25 billion by selling preferred convertible stock and equity but was unsuccessful. The lender rushed to secure alternative finance on Friday by selling the business.

Where did the uninsured deposits end up?

The FDIC announced on Friday that SVB-insured depositors would have access to their money by Monday am at the latest. The original statement stated that uninsured depositors would first receive a dividend and then receivership certificates for any outstanding balances that might be paid out over time, implying that payback wasn’t guaranteed. But then, on Sunday, the FDIC said it would use a “systemic risk exemption” to cover the uninsured deposits of SVB and Signature, together with the Treasury Department and Secretary Janet Yellen, and President Biden. On Monday morning, customers could also access their deposits.

Immediate Impact: VC Market

The immediate impact of inaccessible bank accounts on the VC market Startups that kept operating funds with SVB would have experienced an existential crisis. Due to a significant lack of available cash induced by the delayed fund raising climate, the VC sector was already in a complicated situation. The good news was that business were able to access the total amount of their deposits on Monday, for the beginning of a successful operation. With a backup finance plan, many firms could get capital quickly. The $152.0 billion in uninsured deposits SVB includes startup companies’ working capital.

There was an immediate operational issue for businesses that need to pay wages or pay for the usage of services, whether or not all that capital was eventually recovered. Investors would have major impact by the loss of portfolio firms. Not just by corporate closures, had access to this money been lost. Due to limited partners’ lowered confidence in the venture market due to these losses, there would have been fewer investment vehicles available and a more pronounced decline in short term venture funding.

Impact on Depositors and Investors

Bank deposits of up to $250,000 per depositor per bank for each account section undergo insured by FDIC. Silicon Valley Bank accounts with $250,000 deposits would get their money back. Unfortunately, most of the funds in Silicon Valley Bank were uninsured as they had more than $250,000 of deposits. 

However, investors won’t be so lucky, as those who own stock in SVB Financial Group may not get their money back.

Implications for the venture lending market

The abrupt fall of SVB significantly impacts VC-backed start ups that currently hold a loan contract with the bank. Especially when it is unclear when the bank will get sold and whether existing loan terms and conditions will be honoured when an acquirer steps in. SVB has provided debt solutions to start ups across the venture ecosystem, ranging from pre-revenue, early-stage startups to late-stage ones, with up to $75 million in recurring revenues. In 2022, SVB issued $6.7 billion of venture debt, making up 9% of its loan portfolio. This type of debt is “investor-dependent” (ID), meaning that loan origination is contingent upon the existing investors’ commitment to a company’s future success. 

The bank’s collapse has had a particularly detrimental effect on early-stage startups that have yet to develop vital financial metrics and primarily rely on their investor syndicate to secure debt. For years, startups in nascent stages of development had access to term loans from SVB with low-interest rates and ample structural flexibility. With its collapse, early-stage startups without a steady revenue stream will likely encounter severe headwinds seeking alternative debt financing. Late-stage companies, on the other hand, face a different set of issues. Not only do these companies require larger loan packages, which makes borrowing from debt funds even more costly, but the private credit market, a significant player in debt financing for companies operating at a more developed stage, also faces market uncertainty. This is thus adding another layer of challenges. Percentage-wise, the bank has been shrinking the weight of its venture debt portfolio.

Timeline Of The Collapse

The SVB crash happened rapidly throughout just a couple of days. Following is a timeline of events: 

March 8: SVB announced its $1.8 billion loss on its bond portfolio and planned to sell both common and preferred stock to raise $2.25 billion. 

March 9: The stock of SVB Financial Group, which is the holding company of SVB, crashed at the market opening. Other major banks’ stock prices also took a hit. 

March 10: SVB Financial Group stock trading gets halted. Federal regulators announced a takeover of the bank.

March 17: The parent company of Silicon Valley Bank, SVB Financial Group filed for bankruptcy.

March 26: First Citizens Bank acquired all of Silicon Valley Bridge Bank except for $90 billion of securities and other assets that remained in FDIC receivership.

Source :S&P CApital IQ

Key takeaways

• Over nearly 40 years, SVB has become many successful venture startups’ leading lenders and banking partners. This brand recognition and trust resulted in SVB amassing more than $175 billion in total deposits. Since liquidity options for many startups dried up, these enterprises began to rely heavily on fund withdrawals from their bank accounts to extend the runway. To fund these withdrawals, SVB forced to sell many Treasuries and other securities. This devalued due to recent interest rate hikes. Fearing for the safety of their capital, depositors began to withdraw their funds in bulk. SVB could not fulfil withdrawal requests, and the FDIC seized the bank on March 10. Fortunately, the Fed assured all depositors that 100% of their capital would be safe and accessible by Monday.

• SVB’s failure further tightens the squeeze on an already sluggish venture market. Quarterly capital invested fell over 60%. And the deal count was down almost 25%, despite high relative numbers on a historical basis. Re-allocating resources and banking will only lead to a further slowdown in the financing market in Q1 2023. Bank loans were mostly made to GPs in both VC and PE. Thus allowing these funds to access capital more quickly for deals. 

• The lightning strike of SVB’s collapse led to concerns over a possible contagion effect. Mainly on other regional banks collectively suffering from the same unintended consequences of the Fed’s interest rate hikes. Now that the lender of choice for many investors for decades suddenly gone. So it expects to see startups and investors looking to raise funds from non-bank lenders. While it remains unclear what will happen to companies with loan contracts with SVB. As an acquisition is yet to announce,  VC-backed startups rush to raise debt from non-bank entities may push prices higher.

 • Besides SVB’s venture debt portfolio wasn’t the primary cause of the bank’s abrupt fall, the critical role the bank has been playing in venture lending. It sounded alarms to active players in the venture market. For example, Hercules Capital is one of the largest business development companies that focus on venture lending. It released a business update in response to SVB’s collapse on Monday morning. Venture debt lenders will likely receive intensified inquiries and closer scrutiny in the short term. 

What is creeping up next?

The sale of SVB proceedings will be under careful observation. The focus will also shift to longer-term concerns about the soundness of banks that investors are already raising. If interest rates continue where they are, the Fed’s borrowing facility may address immediate liquidity needs. Still, it won’t be able to restore the value of banks’ securities portfolios. In many ways, banks had slipped Washington’s attention in the years following the financial crisis.


1.)What led to the failure of Silicon Valley Bank?

The bank’s balance sheets were overexposed, causing it to sell bonds at a loss to pay the withdrawal. And its biggest customers withdrew deposits rather than borrow at higher interest rates, which caused the bank to go bankrupt.

2.)Why did Signature Bank and Silicon Valley Bank fail?

Clients of SVB were withdrawing deposits faster than the bank could cover them with cash reserves, so it opted to sell $21 billion of its securities portfolio at a $1.8 billion loss to meet its obligations. The lender tried to raise more than $2 billion in new capital due to the drain on equity capital.

3.)What occurs to SVB staff members? Can SVB bounce back?

Key executives were fired, including Greg Becker, the CEO. Regulators are currently unwinding the bank and asking a lot of other staff to perform the same duties as they did before. Regulators may attempt to reclaim funds used to cover deposits by selling the bank. The SVB Financial Group’s larger business also include other areas that may auctioned off, like an investment bank.

4.)Could the bankruptcy of SVB trigger a recession?

The unsecured deposit guarantee may limit immediate effects, such as businesses holding money at SVB. Yet, lending that would tie up their resources could restricted if other banks are concerned about their capital or deposits. Still, the events altering the Federal Reserve’s rate of interest rate hikes is a key question.