From Startup to IPO: Get The $$ You Need To Grow

A few weeks ago, I wrote a post giving an overview of the type of investors that will provide the funds for your entrepreneurial enterprise as you grow.  This is a legal site, so I was very much focused on giving you the legal framework that governs who is allowed to invest in your company. But, Anna Vital's post goes one step further - it puts all this information in a context that you as a business owner will recognize.  To do this, she shows the steps needed (as illustrated by the infographic below) to take a hypothetical startup from an amazing idea to being a public company.

As small business owners, we are all familiar with the early stages (founder, co-founder, and investment from family and friends).  If you want to know who Angel Investors are, check the definition for "Accredited Investors" in my recent post on this issue. You get access to their funds via:

In my original post, I also missed one crucial investor that is shown on this infographic: the venture capitalist.  Venture capitalists get their funds from retail an institutional investors like banks, insurance companies, investment companies, and other Qualified Institutional Buyers - QIBs.  As Ms. Vital discusses, these people only invest north of $500,000 once your company has a proven track record with your customers.

Then of course, the next stage after venture capitalist investment is to go public by issuing an IPO

But, in a few short months, this infographic will need to be updated because somewhere, between the stage where you get money from family and friends and go public in an IPO, you will have the option of getting up to $1,000,000 per year from the general public via equity crowdfunding. As we discussed in my original post, this was legalized in the JOBS Act of 2012 and once the Securities and Exchange Commission finalize the rules at the end of 2014 or early 2015, regular everyday people (i.e. not accredited investors) will get the chance to invest in your venture BEFORE you officially go public.

You should note, however, that this infographic is a very generic overview, it is not the complete picture.  Next week we will discuss other options, like microfinance and government grants that will also give you access to the cash you will need to expand and grow your business.

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Posted on August 15, 2014 and filed under Finances.