The Story
PNK is more than just an investment firm. We’re a strategic partner committed to leveraging growth, advising on sustainability, and investing in both people and businesses.
About Us
PNK is more than just an investment firm. We’re a strategic partner committed to leveraging growth, advising on sustainability, and investing in both people and businesses.
About UsFrom seed to scale, we’re with you every step of the way. PNK provides tailored investment solutions to help businesses accelerate growth. Whether you’re an early-stage startup with a promising idea or an established company seeking expansion capital, we’re committed to helping you achieve your goals.
Finance
Investment Insight
Launching a new product is inherently risky, especially for startups that have just started their business. Will it cater to customer demands? Will the market even support it? The minimum viable product (MVP) serves as a powerful strategy to mitigate these risks. The concept of “minimum viable product” was first popularized by entrepreneur Eric Ries, who is also known for his contributions to lean startup methodology.
Instead of investing heavily in a full-fledged product, an MVP allows companies to test product hypotheses with a simplified version, gathering valuable feedback before committing significant resources. Let’s explore the meaning of a minimum viable product (MVP), its purposes, and how to develop it.
Minimum viable product, also known as MVP, is the basic product development model that only includes the essential features necessary for early adopters to use and interact with. An MVP must solve a significant problem for users, providing enough value that customers are willing to pay. It has become a standard tool for startups to test their products, as the MVP is used to observe how real users interact with the product so they can gather feedback and improve their products before launch.
Minimum viable product (MVP) is a crucial strategy to ensure the success of the actual product during its official launch. Here are some purposes for developing an MVP:
The primary goal of an MVP is to validate product ideas by testing product hypotheses with real users. The MVP allows companies to gather insights about customer needs and preferences before investing significant resources in full-scale product development. Companies can also validate whether there is genuine demand for the product by using an MVP.
MVP serves as a low-risk testing ground for the products before they are ready to launch. By validating product ideas through user feedback before committing to extensive development, companies can ensure that their products meet the market needs and demands. Through MVP, companies can also refine their products based on real user insights.
The MVP approach can shorten the time from concept to launch. By concentrating on core functionalities, companies can bring their products to market more quickly and capitalize on emerging trends or demands before their competitors. With MVP, companies can also establish their presence in the market and start gathering user feedback sooner.
By launching a basic version, businesses can collect valuable insights from early adopters to improve the product. When companies launch an MVP, they release a basic version of their product that includes only the most essential features. This allows early users to interact with it, test its functionality, and provide feedback. It is crucial to refine your product based on real user insights.
Developing a full-featured product can be time-consuming and expensive, especially for startups. By focusing on developing an MVP, companies can launch a basic version of their product quickly and economically, minimizing initial investment and financial risk. Companies can also allocate resources more effectively and avoid the pitfalls of investing in untested ideas.
Proof of concept and a minimum viable product are two critical terms in product development. Both serve as the foundation of successful products, but they have different purposes.
Proof of concept (PoC) is a small-scale demonstration that aims to verify the feasibility and potential of a product idea. Companies commonly use PoC to test a product’s technical or functional aspects before requiring a fully functional product. The objective of PoC is to mitigate risks by confirming that the product idea can work in a real-life scenario before investing significant resources in product development.
Compared to proof of concept, minimum viable product (MVP) represents a more advanced stage in the product development lifecycle. It only includes the essential features necessary for users to interact with. The objective of MVP is to gather feedback and validate the product’s market fit by developing the early version with basic functionalities.
If you are an entrepreneur wanting to build a successful product, developing a minimum viable product is a strategic approach to test your products with minimal resources while gathering valuable user feedback. Here are the steps to develop an effective minimum viable product:
Start by defining the specific problem your product aims to address. To validate the problem and solution, conduct thorough market research to understand your target customers, their needs or pain points, and the existing solutions they use. For example, if your target audience’s problem is tracking and managing various work projects efficiently, you can develop an MVP for a project management app to answer this problem.
Performing extensive market research is essential to validate your idea. This includes running surveys, focus groups, talking to your potential users, and competitive analysis to gauge demand and understand user preferences. Clearly define your product’s unique value proposition and how it stands out from competitors. This step is crucial as it helps mitigate the risk of building a product that may not have a demand in the market.
After conducting market research, create a list of essential features that your MVP must include to solve the identified problems faced by your target audience. Differentiate between “needs” and “wants” by categorizing these features into high, medium, and low priority. You should focus on developing only the core functionalities that provide value to users.
The next step is developing your MVP based on the insights gathered in the previous step. Make sure your MVP is functional enough for users to interact and provide feedback, but it doesn’t require perfection at this stage. The goal is to launch quickly and start gathering feedback from users. For example, if you are developing a mobile app, this may be an app with a single feature or a few basic features.
Launch your MVP to a small group of early users to gather feedback. Collect feedback through surveys, analytics, or direct user interactions. This step is essential to see how well your MVP meets user needs and where improvements are necessary.
Next, analyze the feedback gathered and identify areas for improvement or additional features that users desire. Use this information to refine your MVP and enhance it based on real user experiences and needs.
The journey from a minimum viable product to market dominance requires more than just a brilliant idea but also strategic funding and expert guidance. Phintraco Natha Kapital understands this transition and offers tailored investment solutions to empower businesses at every stage. Our diverse portfolio spans a range of sectors, including our core strength in ICT – encompassing IT infrastructure, contact center solutions, token technology, and more – as well as emerging opportunities in property, manufacturing, and education. We provide not just capital but also the advisory services and technological expertise necessary to scale your MVP into a market-leading product.
Phintraco Natha Kapital believes in investing in the founders as much as the business itself, providing personalized support and guidance tailored to your unique needs. Choose Phintraco Natha Kapital, and let us help you transform your MVP into success.
Editor: Trie Ayu Feminin & Irnadia Fardila
Finance
Investment Insight
Imagine a promising tech startup that recently secured Rp500.000.000 in funding. The founders are excited to “burn money” on activities such as scaling operations, hiring top talent, investing in marketing and product development, etc. However, within 10 months, the company faces a grim reality: its cash reserves are almost depleted, and profitability is still out of reach. What went wrong? The answer lies in its burn rate.
Burn rate is a crucial metric for determining how long a company can sustain its operations, depending on its current cash reserves. Let’s learn more about burn rate’s meaning in business and how to determine it.
Burn rate is a financial metric that indicates the speed at which a company consumes its cash reserves, typically monthly. This metric is commonly used to assess how long a company can continue operating before it becomes profitable or needs additional funding.
Many entrepreneurs may wonder what constitutes a good burn rate. While this varies by industry and business stage of development, a lower burn rate is typically considered favorable, as it indicates efficient use of funds. Conducting a burn rate analysis allows entrepreneurs to assess the company’s financial health over a specific period.
Here are several reasons why burn rate is important for business:
A high rate often indicates potential financial troubles, showing that the company burns too much cash if spending is not controlled. Conversely, a low rate might suggest inefficiencies or missed growth opportunities, as the company may not invest enough. Monitoring this metric is essential to maintain a balance between spending and growth.
Burn rate measures how quickly a company is spending its cash reserves. With this, the company can forecast when it may run out of funds and make informed decisions about future additional funding or cost-cutting measures. This is important for startups that often operate at a loss in the early stage while trying to establish themselves in the market.
Analyzing the burn rate can help make strategic business decisions such as scaling operations, hiring new staff, or launching new products. The company can align its financial strategies with long-term business goals by assessing this financial metric alongside revenue growth and business objectives. The company can also adjust operational strategies based on current financial conditions.
Both gross and net burn rate have different purposes and ways of being calculated.
The GBR represents the company’s operating expenses. It is calculated by totaling all the operational expenses, such as rent, salaries, and other overheads every month. Here is the formula for GBR:
Gross Burn Rate (GBR) = Total Monthly Cash Expenses
An example of the GBR is when Company A has monthly expenses of about Rp80.000.000, which consist of salaries, rent, utilities, product development, etc. This means the GBR is Rp80.000.000.
The NBR takes into account both expenses and revenue. It shows how much money a company loses monthly after accounting for income. The formula is:
Net Burn Rate (NBR) = Total Monthly Cash Expenses – Total Monthly Revenues
An example of the NBR is when company A, with monthly expenses amounting to Rp80.000.000, generates Rp10.000.000, then the NBR is Rp70.000.000.
After determining the net burn rate, the next part calculates the cash runway, which measures how long the company can operate before running out of cash. The formula is:
Cash Runway = Current Cash Reserves: Net Burn Rate
For example, Company A has cash reserves of around Rp210.000.000 and a net burn rate of around Rp70.000.000. It can sustain operations for three months without additional income or investment.
Burn rate refers to the pace at which the company consumes its cash reserves, typically calculated monthly. This rate is crucial to understanding how long the company can operate before it needs to generate positive cash flow or secure additional funding.
On the other hand, run rate is a metric to estimate future revenue based on current performance, extrapolating the annual earnings from the company’s current revenue stream. It predicts how much revenue the company can generate over a specified period (typically annually). The run rate helps businesses forecast their future revenue, assuming that current conditions remain consistent providing insights into potential growth and profitability.
To reduce the burn rate effectively, you must focus on decreasing expenses and increasing revenue. Here are several strategies you can do to achieve this:
When the burn rate increases, optimizing or cutting expenses is necessary, as expenses are directly related to it. Assess any non-essential expenses that can be cut without harming the businesses. You can also focus on activities directly contributing to revenue generation or significant growth opportunities.
Boosting your income is just as crucial as cutting down expenses. Explore ways to enhance revenue through improved marketing, increasing traffic, or raising prices strategically. A small price increase can impact gross margins without drastically affecting customer conversion rates.
Adopting a lean startup approach may be beneficial by minimizing expenses across your business operations as you seek product-market fit. This approach focuses on building businesses based on testing along with developing products. It means continuously evaluating and improving processes to make them more efficient.
You can consider outsourcing to handle non-core activities in your company, as it helps reduce expenses related to maintaining internal employees. Outsourcing can also convert fixed costs into variable costs, offering flexibility and business efficiency without compromising quality or capacity.
Accelerating business growth and realizing business ideas would be easier with the right partner. Phintraco Natha Kapital is a trusted partner to support business’ long-term success, blending strategic investment with innovative support to help your startup thrive. As a capital company with a diverse investment portfolio from ICT, property, manufacturing, and education sectors, we go beyond providing capital. We also deliver tailored advisory services and strategic guidance to support the people behind the business.
Supported by the reputable Phintraco Group, our vast network and industry connections enable us to forge valuable partnerships and unlock new opportunities. Whether you are an established business seeking leverage or a promising startup, we are committed to supporting you in reaching success.
Editor: Irnadia Fardila
Finance
Investment Insight
With the rise of startups and new aspiring entrepreneurs, one methodology called “lean startup” has emerged as an innovative approach to developing startup businesses. Popularized by American entrepreneur Eric Ries through his book “The Lean Startup” in 2011, this business framework emphasizes the importance of customer feedback to support iterative product development. Adopting the lean startup offers several benefits, such as reducing risk and faster time to market. Let’s delve deeper into key concepts about lean startups and how they can transform how you approach startup development.
Lean startup is a methodology for developing businesses and products emphasizing rapid iteration, customer feedback, and continuous learning. The lean startup business model focuses on building businesses based on testing as they develop products. This method includes creating a minimum viable product (MVP) to test hypotheses and gather insights rapidly. By validating business ideas through real data, startups can reduce waste, optimize resources, and improve their chances of success in the market.
Lean startup consists of five fundamental principles that guide entrepreneurs in developing sustainable businesses efficiently:
Entrepreneurs are Everywhere: This principle means that entrepreneurship is not limited to tech startups or small businesses, but consists of anyone who owns a business, regardless of the industry or scale.
Entrepreneurship is Management: Startups need a unique form of management that differs from traditional business models. It asserts the need for flexible and adaptive management practices that respond to uncertainty and rapid changes in the market.
Validated Learning: Validated learning is a core aspect of a lean startup method, as startups use scientific methods to test their hypotheses about product-market fit and customer needs.
Innovation Accounting: This principle focuses on measuring progress through metrics that matter for startups. Innovation accounting includes tracking milestones and assessing the effectiveness of product iterations based on customer feedback.
Build-Measure-Learn: The Build-Measure-Learn principle is a loop that starts by creating a minimum viable product (MVP), measuring its market performance, and refining it based on customer feedback.
Lean and traditional startups are two distinct methods of launching and developing new business ventures. However, the lean startup method focuses on how to experiment frequently with business ideas and adjust based on feedback from potential customers. It also allows rapid iterations based on real market responses. This makes lean startups operate in short, flexible cycles that promote agility. Lean startups also embrace risk as a source of learning, allowing entrepreneurs to test ideas without heavy financial burdens.
Unlike lean startups, traditional startups rely on a detailed business plan outlining the vision, goals, and strategies before launching. They emphasize extensive market research and a linear product development process. They also require significant initial investment to develop a fully realized product before market entry. However, they follow a more rigid structure with long development phases. There is also a risk of significant losses if the initial assumptions do not align with market realities due to inflexible planning.
Building a lean startup model consists of four crucial stages that inform the entire product and business development for a startup:
The first stage is creating a business model canvas, which will serve as a visual tool to outline the fundamental components of the startup. This canvas has nine components: customer segments, value proposition, revenue streams, channels, customer relationships, key activities, key resources, key partners, and cost structure. Entrepreneurs should analyze these components and how they relate to the business idea and develop assumptions about each.
Next, entrepreneurs develop and test hypotheses based on their business model canvas analysis. This includes breaking down assumptions into three categories:
Desirability: Do customers want this product?
Viability: Can we make money from this product?
Feasibility: Can we build this product?
This step is essential to validating business ideas and determining which aspects of the business need further exploration or adjustment.
The next step is creating a minimum viable product (MVP). This simplified version of the product allows startups to gather validated learning, such as customer feedback, with minimal effort. It also serves as an experiment ground for the hypotheses formulated in the previous stage.
After launching the MVP, startups measure its performance, gather customer insights, and learn from the collected data. This iterative process allows businesses to refine their products continuously, and it ensures startups align with market demands and customer expectations.
There are several advantages to adopting lean startup methodology, such as:
The lean startup method emphasizes launching products quickly, often through a minimum viable product (MVP). This enables businesses to enter the market faster, generate revenue more rapidly, and gather customer feedback more rapidly than their competitors.
Adopting a lean startup method involves testing assumptions and gathering customer feedback early in the development process. This can minimize risks associated with product launches and help startups validate their business ideas before significant startup funding is made, reducing the risk of costly failures.
Using a lean startup method, startups can allocate their resources effectively by focusing only on activities that contribute to learning about customers. This will minimize waste and optimize financial investments, leading to lower operational costs and higher profitability.
Phintraco Natha Kapital is your trusted partner for accelerated growth, blending strategic investment with innovative support to help your startup thrive. As a capital company with a diverse investment portfolio from ICT, property, manufacturing, and education sectors, we go beyond providing capital. We also deliver tailored advisory services and strategic guidance to support the people behind the business.
Supported by the reputable Phintraco Group, our vast network and industry connections enable us to forge valuable partnerships and unlock new opportunities. Whether you are an established business seeking leverage or a promising startup, we are committed to supporting you in reaching success.
Editor: Irnadia Fardila
Finance
Investment Insight
You may be familiar with Airbnb, an online marketplace connecting hosts and guests worldwide for short-term rentals. What started as a humble idea by two entrepreneurs soon transformed into a global hospitality giant. But before they achieved this success, they needed the initial capital to fuel their growth. This is where seed funding came into play.
Seed funding serves as the first external funding a startup receives, typically from angel investors of venture capital firms. This funding is crucial to provide necessary resources to validate product-market fit, build a strong team, and lay the foundation for future growth.
Let’s explore key insights of seed funding and strategies to raise seed funding successfully.
Seed funding, also known as seed capital or seed money, is the earliest stage of startup funding. This funding is used to cover initial expenses during early-stage startup operations, such as product development, market research, and initial marketing efforts. The primary goal of this funding is to help startups turn their concepts into viable products and validate market potential.
Some entrepreneurs may wonder how much seed funding is required. In Indonesia, the amount of seed funding ranges from Rp500 million to Rp2,5 billion. They can be provided by venture capitalists, angel investors, or even family and friends who trust the potential success of the startup.
Understanding how seed funding works is crucial for entrepreneurs who aim to secure financial backing for their innovations. Typically, seed funding schemes are designed to provide entrepreneurs with the capital needed to initiate their business ideas. It works in pretty much the same way as other forms of equity and venture capital funding: startups obtain seed funding in exchange for an ownership stake in the company.
Seed funding may also be structured as debt that needs to be repaid. Once funding is secured, it is crucial to efficiently allocate resources to maximize business growth opportunities. One crucial consideration for entrepreneurs is how long seed funding should last. This funding is expected to cover a period ranging from six months to two years, depending on the startup’s specific needs.
Startup companies obtain their seed money through various sources, such as:
Startups may experience many risks when raising seed funding for their businesses. Some of the risks are:
Securing seed funds is a crucial step for startups aiming to bring their innovative ideas into reality. The strategies may vary depending on the source of seed funds, but here are the essential steps to guide you through the process:
Before raising seed funding, you must first develop a solid business plan that outlines the company’s vision, market opportunity, competitive landscape, and financial projections. This plan not only will serve as a roadmap to success but also as a persuasive tool to attract investors. A well-structured business plan should highlight the unique value proposition of the startup and demonstrate a clear understanding of the target market.
Assess how much capital you need for your business and for what specific purposes. This could include product development, market research, hiring, or operational costs. Establishing a clear financial plan will help you articulate your needs to potential investors and demonstrate the viability of your business model.
Your suitable funding sources during the seed funding stage can include angel investors, venture capital firms, crowdfunding platforms, personal networks, etc. Networking within industry circles and participating in startup incubators can also provide valuable connections and mentorship opportunities. You can also list 50-100 potential investors who are relevant to your industry and stage of development.
A persuasive pitch deck is necessary to demonstrate the potential of your startup business. It should be able to communicate your business idea, the problem you are solving, your solution, market opportunity, and go-to-market strategy. If possible, highlight any traction or validation you have achieved so far, as this will enhance your credibility.
Once you have interested investors, it’s time to negotiate terms about the seed funding scheme and close the deal. Clearly state how much funding you need and how much is left in this round. This transparency will encourage potential investors to commit quickly. Remember to keep equity dilution in mind. Ideally, you should aim less than 20% during this funding stage.
Securing seed funding is crucial for growing startups that strive for success and achieve their full potential. Phintraco Natha Kapital emerges as the ideal partner for businesses seeking to fuel their innovation. Phintraco Natha Kapital is a capital company focusing on investment with a diverse investment portfolio, spanning from ICT, property, manufacturing, and education.
Our support doesn’t stop at just providing capital, but also strategic guidance, tailored advisory services, and access to a vast network of industry connections. Our focus extends beyond financial returns, emphasizing the importance of supporting the people behind the business and fostering sustainable growth.
By partnering with Phintraco Natha Kapital, businesses will get the financial resources needed to secure long-term success and sustainability.
Editor: Irnadia Fardila
Finance
Investment Insight
Many people start investing for various reasons, such as building wealth, achieving financial goals, and securing their future. Many investors are interested in investing in startup businesses and other investment options. You may be wondering, “Why are people investing in startups?” The reasons may vary, from seeking high financial returns to supporting ideas that align with the investors’ values and ideas.
While the rewards of startup investment can be compelling, the risks can’t be ignored, as startup businesses are prone to failure. Whether you are a seasoned investor or a beginner investor looking to diversify your investment portfolio, it is crucial to understand the basics of startup investment, from knowing the benefits and risks to learning tips on investing in startups.
Generally, startups are defined as newly established private companies under 5 to 10 years old. Most startups aim to develop a unique product or service to answer customer’s demands and scale rapidly. Startups usually start small and seek funding from external parties, also known as investors, to grow their business. This is called “startup investment”.
Investors fund startups expecting to earn returns if the startup succeeds, typically through a liquidity event such as an Initial Public Offering (IPO). There are many ways for investors to invest in startups, such as angel investing, equity crowdfunding, or venture capital funds.
Startup investment offers plenty of interesting benefits for investors who desire high returns. Some of the benefits of investing in startups are:
Many startups focus on developing innovative ideas, especially if the ideas do not exist in the current market. They also adopt agile business models to support their business growth. This allows them to adapt quickly to market changes. Startups’ agility can lead to significant growth. Through startup investment, investors will have the chance to achieve substantial returns as these companies scale rapidly.
Investors must diversify their portfolios to reduce the impact of any investment performing poorly. Startup companies have different risk profiles than other established companies, which can help mitigate the overall risk of their investments. This diversification is crucial to supporting long-term investment success, as it reduces reliance on any single asset class.
Investing in startups often provides valuable networking opportunities with passionate entrepreneurs and other investors. Through networking, investors can get deeper insights into emerging investment trends and foster collaboration that may benefit future investment endeavors.
Supporting Innovation and Entrepreneurship: By investing in startups, you’re supporting the growth of new businesses, which can foster job creation, innovation, and economic development.
Impact Investing: Some investors focus on startups with missions that align with their values, such as companies focused on sustainability, education, or healthcare, allowing for both financial and social returns.
Besides its exciting benefits, startup investment carries significant risks that any investor should know. Some of the risks associated with startup investment are:
Startup companies are notorious for having a high failure rate, with many startups failing within their first few years. The risk of total capital loss is massive, as new ventures have no guarantees of success. Factors causing failure in startups include poor management, insufficient funding, inadequate business planning, and lack of market demands.
Startup investments are likely to be illiquid. This means the assets can’t be sold or converted into cash quickly without a significant loss in value. Investors may find selling their shares difficult or recovering their investment quickly. Startups are often privately held and do not trade on public exchanges, which limits investors’ exit options.
As startups continue to seek additional funding for their businesses, they may issue new shares that dilute existing shareholders’ ownership percentages. This means the percentage of equity investors holding will decrease relative to what they originally had. This will reduce the potential return on investment for early investors if the startup eventually succeeds.
Startups may face challenges complying with industry regulations or legal requirements, which could result in fines, restrictions, or shutdowns. Other hand, Startups often rely on unique ideas or technology. Disputes over IP or inability to secure patents can harm their prospects.
Startup investment can be an intriguing yet challenging opportunity. Here are some essential tips for starting as a startup investor and investing successfully.
If this is your first time investing in startups, it is important to familiarize yourself with the different stages of startup funding, including pre-seed, seed, series A, and beyond. Each stage presents its risks and opportunities. You also need to know the various types of stakeholders and their roles. This includes founders, angel investors, venture capitalists, etc.
Conducting thorough due diligence involves meticulously evaluating your investment options in startups. This includes evaluating the startup’s business model, the founding team’s capabilities, market potential, financial statements, and competitive landscape. This will help you mitigate risks and make well-informed decisions.
Are you investing to get financial returns? Or do you want to support innovative ideas? These are your considerations to clarify what you hope to gain from startup investment. This will help narrow down your investment choices, how you want to invest, and how much risk you are willing to take. You can also look for a combination of financial returns and supporting innovative ideas that align with your values.
Concentrating resources in a single investment, like a startup investment, is dangerous, as there is a high risk of failure. Diversifying your investment portfolio is necessary to mitigate risks associated with startup investments and enhance potential returns. This means spreading investments across multiple startups rather than putting all your funds into one investment.
Building relationships with the founding team will help you gauge their capabilities in executing their business and mindset to build a successful company. Understanding their vision and dedication lets you decide whether their startup is worth your investment. You should also look for synergy between your values and the founding teams’. Shared values will enhance collaboration significantly.
Phintraco Natha Kapital is a trusted partner for businesses seeking strategic investments and advisory support. Established in 2020, we have been committed to empowering businesses across diverse sectors.
Our investment portfolio reflects our deep roots in the ICT industry, covering IT infrastructure, contact center solutions, token technology, smart cards, network and IT security, electronic transaction services, and business process outsourcing. These investments show our commitment to fostering technological advancements that drive business success. Beyond ICT companies, we are diversifying into high-potential sectors like property, manufacturing, and education, further broadening the scope of our impact.
What sets Phintraco Natha Kapital apart is our tailored approach to investment and advisory services. We provide essential capital and customized strategic guidance to help businesses to unlock their full potential. At Phintraco Natha Kapital, we invest in business and build lasting partnerships that fuel sustainable growth. Together, we will shape a brighter future for innovative businesses.
Editor: Irnadia Fardila
Finance
Investment Insight
Starting a business often requires a solid financial foundation. Whether you’re launching a tech startup, a small business, or an innovative new product, securing the right funding is a crucial step.
Funding, whether from venture capitalists, angel investors, or any other sources, provides startups with the capital they need to grow, innovate, and scale their business. Learn more about sources to get funding for startups and how to secure them successfully.
Funding for a startup can be obtained through various methods and models, each with advantages and challenges. Some of the common sources of startup funds are:
This funding source, also known as bootstrapping, uses entrepreneurs’ personal savings to start their businesses. Bootstrapping is often the easiest way to secure initial capital for a startup at the early stage. This means entrepreneurs have to launch minimum viable products to get feedback and traction from customers. Personal savings help manage the business more efficiently to achieve profitability.
Another funding source comes from personal networks such as friends and family. This method can be less formal and may involve lower return expectations than professional investors. Despite personal relationships, entrepreneurs should treat them as professional business associates. Explaining the type of business being carried out as transparency to potential investors is important.
Angel investors offer startup capital in exchange for convertible debt or ownership equity. Most of them are individuals who invest personal funds. This means they might ask to be involved in business, especially involved in scaling for expansion, financial management, and as strategic mentors. This phase was good for the startup in its early stage with high growth potential.
Venture capital generally comes from investors, investment banks, or financial institutions. It becomes the best funding source for high-growth sectors such as biotechnology or technology. In the process, investors provide capital in exchange for equity stakes in early-stage companies. The venture capital model not only provides financial support but also strategic guidance, mentorship, and access to extensive networks.
This model usually raises small amounts of money from a large number of people via platforms like Kickstarter, Indiegogo, or GoFundMe. It works on consumer-focused products with broad appeal. This means, in this model, at least we already have a fit product ready to launch and also already get a purchase order or agreement.
This fund is easy to get if you have the original idea and directly have an impact (similar to the CSR program), especially in solving environmental issues to create a circular economy. The startup must create a storyline about the business and also impact analysis. This fund model is non-dilutive funding provided by governments, foundations, or corporate programs.
Traditional banks usually offer business loans to cover startup businesses’ initial expenses and operational costs. These loans can help entrepreneurs who may need more personal savings or other financial resources to start their businesses. However, this funding source might be challenging for some startups due to stringent requirements like business history and collateral.
Attending program accelerators and incubators to get Programs offering funding, mentorship, and resources in exchange for equity. This model is like a community forum that the startups can attend and also directly pitch in front of many investors (VC, PE, Angel Investor, etc). The benefits are networking, exposure, and funding.
The funding process for startup businesses typically progresses through several stages. Each stage serves a unique purpose and attracts different types of investors. All levels of startup funding are crucial to building and scaling the business effectively.
Pre-seed funding is the early stage of startup funding, where entrepreneurs use personal savings or funds from friends or family to start developing their businesses. In this stage, business research and development are still in progress or even have a working prototype. The target is to create a minimum viable product and validate the business concept.
In the seed funding stage, entrepreneurs seek external help to further develop their product, such as angel investors, venture capitalists, or crowdfunding. This funding helps in conducting market research and launching the product. The entrepreneurs try to build traction to get a relentless flow of revenue. Otherwise, the startup may fail to develop more.
The Series A funding stage is important for startup businesses with a solid business model and looking to scale their operations. Companies that entered this stage mostly already have a customer base and some revenue. The funding in this stage comes from angel investors, capital firms, or through equity crowdfunding.
The series B funding is targeted to expand the startup’s market reach and scale its operations further. Startup businesses in this stage are expected to have a steady stream of revenues and are looking to grow their customer base significantly. The funding source comes from venture capitalists and late-stage investors.
This funding stage can also be used for acquisitions of other companies to scale rapidly. Parties such as investment banks, hedge funds, private equity firms, and venture capitalists will be involved in the series C funding stage. After this funding stage, it can be continued to series D, E, and beyond, depending on the company’s performance, profitability, and the market.
Exit funding stage, also known as Initial Public Offering (IPO), is the stage where the startup offers its shares to the public for the first time. This process transforms a privately held company into a publicly traded business entity, allowing it to raise significant capital for further growth.
Securing funding can be a challenging yet crucial process for startup businesses. Entrepreneurs must deploy several strategies to attract investors and raise capital to finance their business operations. Some of the strategies are:
A clear business plan is necessary to prove that the business has growth potential and will be profitable. This plan outlines the company’s vision, objectives, market analysis, and startup financial plan projections. It is also important to clearly articulate the company’s unique value proposition that differentiates the startup from its competitors. This will enhance its appeal to funding sources.
A strong team is the backbone of every early startup business. It is important to get a team with excellent talent and experience and boost their performance when working for the business. This involves delegating work effectively, including team members in decision-making, avoiding micromanaging, and communicating effectively.
Building relationships through networking with the right people will make securing funding for your business easier. Business networking can also lead to valuable introductions to potential business partners and other business opportunities. Entrepreneurs can try attending industry events, joining startup incubators, and connecting with potential investors through platforms like LinkedIn.
Pitching to potential investors involves compellingly presenting the startup’s business plan to attract funding. It includes creating a well-structured pitch deck that highlights the problem the business will solve, the unique solution, the target market, financial projections, and the team’s expertise. The goal is to convince investors of the startup’s potential for growth and profitability.
Finding the right funding partner is crucial to ensuring the startup’s long-term success. Phintraco Natha Kapital serves as a strategic partner to support businesses’ funding and growth. We provide essential capital and advisory services to empower businesses in their growth journeys.
We invest in businesses and the people behind them. Whether you are an established business seeking leverage or a promising startup, we are committed to offering tailored solutions to help you achieve your goals. Our investment portfolio includes various companies, from IT infrastructure, education, property, and manufacturing.
With Phintraco Natha Kapital, you will have a partner who understands your business and is dedicated to your success.
Editor: Irnadia Fardila