FINANCING MODELS FOR GLOBAL TECHNOLOGY STARTUPS

FINANCING MODELS FOR GLOBAL TECHNOLOGY

STARTUPS

1. Bootstrapping

1.1 Self-funding Techniques

The use of own resources to finance the company, or bootstrapping, is one of the initial and

essential tactics that allow technology startups to develop a specific plan for the company’s

funding and remain independent from outside investors. It is an approach that entails the

application of capital by the owners to self-finance their enterprise via working capital or credit.

While bootstrapping remains as a strategic method that requires a strict financial plan and intense

personal risks, this strategy can thus, bring significant advantages important for the success of a

new venture. Perhaps the greatest benefit of self-funding is the convenient and potential

elimination of outside interference in the company. In the message of the article Adams (2021),

this autonomy is important to safeguard the purity and integrity of the vision of the startup to its

founders without interference that might alter ideas meant for the company. Full control retention

also ensures that important decisions are made much faster and in consideration of the founders’

market strategy especially in the highly competitive technological world. Moreover, self-funding

shows the intention and belief of the prospective investors/owners to the other personnel and or

customers in the business. According to Barker (2020), personal investment generally reinforces

credibility, wherein the recommender expresses confidence in the product or service’s

sustainability. In turn this can attract customers who can also be impressed by the commitment to

the venture, in addition if future investors are sought then the commitment demonstrated by the

founders will ensure that the potential viability is evident from their willingness to risk personal

assets to make the venture a success. But bootstrapping is not without its setbacks majorly come

from the fact that bootstrapping a capital-intensive technology sector business is very costly.

From this, we understand that a short possibilities list sometimes hampers progress and puts the

creation of new products on hold. Blake (2019) rightly notes that although bootstrapping helps in

developing resourcefulness and seeking innovation, it is not without its drawbacks for, it creates

lots of pressure or financial burden and impacts the founder’s risk profile. The second impact

concerns realism, and how the desire for growth and development has to be subordinated to the

need to pay all the bills and other business expenditures, even though it may happen that most of

these expenses are not going to generate much profit in the short run. It is not always an easy

function since it involves the balancing of funds, which is a very sensitive area that needs

manager that can easily switch between two extremes, and come up with the best solution of the

scarce resources to allocate. However, much successful self-funded startups come out of the

incubation more flexible and able to function even in the firms harsh environment. In this they

are usually better placed to deal with any future adverse movements in their financials thanks to

lean operations in place at inception. Collins (2020) notes that the process of bootstrapping helps

to develop the culture of the efficiency and non-waste, when the behavior, which will be useful

when the company grows, with the aid of the venture capital funding. In situations where

funding is tight, this lean approach can sometimes result in new ways of tackling problems and

designing solutions and processes that may not have been conceived had the full funding been

initially attainable. However, use of bootstrapping has not been off limits because of the

innovation in technology that has offered other channels of bootstrapping. Recruiting people who

have the skills but are looking for their first jobs on the project team can also be cost-effective.

For example, Trello for project management, Canva for content creation, and HubSpot for CRM

and sales are amazing applications that provide excellent features with fairly cheap pricing

models. Internet marketplaces can also mean direct marketing and customers—which gives a

startup the ability to earn money without huge initial capital. Underwood (2020) adds that the

longer of such limited resources by using these digital tools enhances sustainability as it fosters

growth. In conclusion, techniques of self funding as have been mentioned earlier call for a good

planning and a lot of personal effort and determination; however the method has the indisputable

ability to help the technology based start-ups to have their independence of financing as well as

to have sustainable future. Bootstrapping not only assists in keeping control and being focused

upon the initial concept of the start-up but also significantly,” depicts a deep passion for the start-

up. As such, while it entails certain challenges and risks, the integration of digital devices, and

other lean operating strategies can do much to address these issues.

1.2. Revenue Reinvestment

That is why many tech startups consider revenue reinvestment as one of the key factors to further

growth via internal resources rather than going outside and looking for investments. One of the

ways that representant can achieve better results is profits reinvestment: furthering product

improvement, geographical reach enlargement, and better organizational structures. Drawing

upon Barker (2020), it can be suggested that reinvesting revenue is indeed a good funding source

of the growth plan and, at the same time, helps companies avoid direct dependence on external

funding. Not only does it encourage growth but also establishes the strong base of a business

which consists of constantly enhancing and adding value to the product and services by taking

feedback from the market. One major benefit of revenue reinvestment is that the growth rate can

be in line with the areas of performance to avoid overstretching when this method of business

financing is adopted. As startups, meaning that it is crucial to expand in tandem with their

revenue so that they can avoid issues of poor revenue growth because of expansion before the

company develops a strong financial foundation. At the same time it also promotes sound

management of financial affairs and efficient working. As Ramos observes, such companies

must achieve reasonable levels of economic profits that enable self-financing in their

development processes, thus cultivating frugality. Revenue reinvestment helps to create a more

consistent and steady growth in revenue, capital expenditures and operating cash flow as it

avoids the need to resort to using equity financing, which is very dilutive or debt financing,

which is very restrictive. This self-supporting model may be especially relevant when promoting

a business in the context of a fairly saturated market for high tech, where the focus is on

retaining flexibility and creativity. Henceforth, through this, startups can avoid any form of

intervention and thus control their destiny in achieving the true goal of the company. In his

article, Smith (2020) posited that this control is important to sustainable innovation and the

capacity for adjustments to market shifts. On the same note, although freemium is a common

practice among startups, its effectiveness depends on the quantity and quality of revenues reaped

by the startup. It can be cumbersome particularly during the initial formation stages when

sources of income are yet to be established. According to Blake (2019), this is usually the

problem of slow and restrained growth when funds generated by the company’s operations are

not enough to expand the business and capture a bigger market share or introduce new, superior

technologies. It is also imperative that, startups should match reinvestment with good control of

costs as well as look for external capital, where necessary to achieve enhanced growth. New

technologies should also be embraced since they can help to open up more sources of income

and, therefore, fund more reinvestment. Apстック sui generis, for instant, using digital sales

tools and subscription-based incomes will increase the sources of income. Breach of

geographical limits and ways of reaching the customers such as online platforms, automated

marketing can contribute to customer engagement and retention hence enhancing profitability

with relatively low investment. Collins (2020) pinpointed that by jumping on these platforms,

startups may achieve optimization, cost savings, and increased client satisfaction, which is

therefore, critical for establishing improved revenue reinvestment framework. One practical

example of this is the applicability of subscription-based models, is hence, using monthly or

annual subscriptions to promote customer engagement and increased incentives to purchase

products. These models create a steady and predictable revenue that is realized from the

organisation that can in turn be invested into the continuation of the models’ development and

increased market coverage. Furthermore, reaching consumers directly through digital

marketplaces, which includes but is not limited to e-shopping and websites, may also entail less

difficulty in access and diversification, with minimal costs of establishment by emerging

ventures. Another example of facilitating spending is the utilization of automated marketing

tools including, email automation software and social media management software, as part of a

reinvestment plan. Such tools help startups to effectively advertise their services and products

while not spending much money as compared to traditional techniques to which they would have

otherwise been limited in extent. With the help of often updating the key figures of the startup’s

marketing mix based on the collected data, one can effectively control the cost and achieve the

maximum possible ROI. Revenue reinvestment is thus, one of the most potent tools for emerging

tech startups willing to grow at a high pace and keep the business developments under their

control. However, it must operate at a profit and be very vigilant on the balance sheets, but it has

extra benefits and fewer demerits such as; less risk of overexpanding, financial freedom, and

promoting a sound growth path. Thus, building revenue streams and reinvestment of the incomes

with applying of fresh ideas and digital equipment, startups can protect the employers’ niche and

be as flexible as it is possible on the present stage of the industry’s development.

1.3. Cost Management Strategies

Cost control on the other hand entails the identification of cases where expenditure have taken

place illegal cases and finding out ways in which these costs can be reduced or controlled. Cost

management entails the planning, controlling and supervising of costs so that resources are

utilized in an efficient and effective manner. As Underwood (2020) posits, one of the most

crucial factors when it comes to managing the finances of a young business is the ability to

differentiate between fixed and variable costs. This therefore, means that startups should focus

their expenditure on things that fall under the expenditure side of the business models and that

will lead to revenue generation and growth such as product and customer related activities. An

idea in managing cost is through adopting the lean operations where costs are mitigated by

eliminating waste and advacing value. According to Blake (2019), this fosters efficiency and

effectiveness among such startups to also avoid the overhead costs associated with central

operating systems, such as expensive working space and electricity. Lean operations seek to

optimise the flow of work through the organisation in a way that each input brings value to the

output targeted to the customer in order to reduce waste. Technology and automation can also be

employed in startups’ management since it minimizes the employment of labor in various

processes. For instance, the application of SaaS solutions for project management, accounting,

and client relationship management can improve productivity while incurring minimal upfront

costs as compared to traditional software. According to Collins (2020) the key advantages of

cloud-based solutions for startups are the ability to scale the service as needed, flexibility and

reasonable and relatively low price: a startup only pays for the use of the cloud necessary for its

work and does not have to finance its own IT infrastructure. Other resources should also be

automated so that boring repetitive tasks will not consume much human time and energy. Other

crucial approach is things that involve finding and obtaining the most suitable business terms

with the supplies and services. Key management of the organization needs to develop

competitive partnerships with the necessary suppliers since it means that they will be able to get

a lower price through volume buying, long credit terms, and favorable contract terms. Adams

(2021) notes that suppliers are an important area that startups should not only address but should

also constantly undertake a supplier audit and negotiate better terms with suppliers. This thus,

helps the startup to grasp the opportunities before a problem arises hence enabling early

negotiations and getting better deals which would enable the management to balances their cash

flow. Hence, constant auditation and reassessment of contracts is crucial to make certain that

these startups are obtaining the very best of worth for the loan paid. This process hence, involves

reviewing the performance and conditions of the currently active contracts with the aim of

identifying areas of improvement. In this way, the issue of cutting down the costs for the startups

is solved, as they will understand where they can spend less while not ignoring the organizational

moments of quality and services provision. Also, the startups need to adopt the criteria where

one is free to change the supplier if one finds more effective solutions towards cost-cutting in

terms of supplier prices or lack of efficiency. Embracing and promoting the aspect of spending

sparingly with own company organization can create a favorable picture of sustainability in the

long run. Ensuring that the employees are risking finding out and eradicating wasteful activities,

and are made to feel that they have something to do with the expenses that they incur is also part

of making suggestions work in the organization. As Barker pointed out in the 2020 paper, cost

reductions are possible if efforts are coordinated and sustained, thus leading to enhanced

profitability figures. There is also an argument that a so-called zero-based budgeting is useful for

startups as it demands an evaluation of all the expenditures for each new period. This increases

orderliness and control since all expenditures made are required and also meet the company’s

strategic initiatives. As the name suggests, they do not build budgets on previous years and

instead, theyconfigureandfixed budgets on paper from ground zero which not only helps to

remove unnecessary expenses, but is also viewed as an effective way to avoid wasting money.

Therefore, proper cost management means are necessary tools in the tech startups in rising to,

overcome these financial hurdles, and sustain growth while retaining competitiveness. Through

prioritizing the costs that are significant for the organization’s operations, implementing efficient

technology, driving the agreements with suppliers that would provide lower costs, and promoting

cost-sensitive value in an organization, startups can thus, manage costs effectively and improve

their financial health. These strategies are not only useful to regulate the current costs of a startup

but also to build and plan for future expenses and difficulties, making the startups more

sustainable and robust business models in the competitive environment.

2. Angel Investors

2.1. Finding Angel Investors

It is therefore, important for a startup to search for angel investors as it looks for early-stage

funding. While it is possible to access angels using established structures like a firm, this means

it is not as easy as accessing money from similar entities like a Venture Capital firm. It emerges

from a survey done by CB Insights in 2019 that networking events specifically, and angel

groups, in general, account for the most common point of contact with angel investors. Going to

industries’ meetings and becoming a member of an angel investor helps to be in closer touch

with them and get a lot of great chances to get know. I will briefly describe general

organizational tips for startups, and one of the essential organizational tips is to attend industry-

specific conferences and networking events. Such events serve as an opportunity for the initial

interaction with investors who may be willing to invest in a company given the type of industry a

startup belongs to. These events are also very useful in presenting business ideas out to the

general public for critique and also enable the business person to prove his or her expertise in

various business investments to the potential investors, who are keen on adopting new ventures.

That is why, the personal contacts that can be made during such events can really help the startup

get the money it needs; people are much more likely to invest in businesses endorsed by friends

and acquaintances. Another good tactic is becoming a member of multiple angel investor groups.

These are groups made up of independent investors who hence, come together to form a pool of

investors in potential startups. Being a member of an angel group is more than just a better

chance of getting funding as it also opens a door to expertise and experience of funding to the

start ups. These groups have usually established procedures for identifying and financing new

businesses and in many cases may minimize the having to look for funding from other sources.

Besides face-to-face connection, various online technologies have made an effort towards

equalizing access to angel investors. Policies of the such platforms like AngelList or Gust help to

find those businesspeople who would be ready to invest in an early-stage company and are not

tied to the location. According to Kerr and Nanda (2018), these platforms are useful to highlight

the business proposals that startups want to develop, present their ideas to potential investors,

and facilitate the management of investments. The maturing of online networks may help launch

a startup and search for financing without limiting their choice to a narrow circle of friends and

acquaintances. But, with the help of the primary sources and the additional sources like the

article by Rosemarin & Dumont (2020), it can be mentioned that despite the accessibility that

comes with online platforms, relationships and referrals are paramount in angel investments. It is

quite important for the members of the investment community to trust the person they are

working with, so an introduction from some of those one already trusts can be a lifesaver for an

entrepreneur. The other potential sources of funding include; seeking recommendations or

referrals from colleagues, former sponsors, business gurus, and other contacts in their networks.

These referrals can be powerful as they often create a platform to convey the message of support

and acknowledgment of the authority of someone who is providing these recommendations. The

other aspect that must guide the founders is thus, the need to develop a strong story and a

persuasive narrative that clearly outlines and explains the key pillars of the startup, namely the

value proposition, the target market and the business potential of the same. Attracting investors is

always a critical factor in business, and having an organized pitch prepared is always an

impressive gesture in front of investors whether face to face or online. Finally, the honest

disclosure of risks and challenges together with the provision of a specific plan on how they are

going to be addressed may thus, help showcase the entrepreneur’s professionalism and

preparedness. This target was achieved by asking participants to rate the means they think are

effective for accessing angel investors for funding their new venture an option that was later

tested using t- Test. This all-encompassing approach means that when an entrepreneur is fishing,

he or she is fishing in a number of thematic areas while at the same seeking to establish a closer

relationship with the potential investors. Yet, if startups strike the right chord and achieve both

ease of access and connecting with the angels, it can therefore, act as a positive point to address

the challenges of angel investments. Conclusively, it is crucial to assess that though to find angel

investors is not a mere task but implementing adequate strategies, tools, and approaches would

certainly boost up the potential of a start up to get proper financing from angel investors.

Through participation in fairs, conferences, and other industry-relevant events, joining the ranks

of angel groups, proper networking via the Internet, and turning to personal contacts, one can

establish a vast circle of potential investors. And although this approach increases the chance of

attracting the right type of investors due to the higher number of potential candidates, it also

allows startups to establish long-term relationships with those investors that are interested in

their success.

2.2. Pitching to Angels

Finding investors particularly angel investors can be challenging due to the need to find people

who are interested in the idea and would want to fund it. The ability to successfully pitch an idea

is not only a simple matter of providing relevant information but rather is about making the right

stories and capturing their attention and goals. As stated by Harvard Business Review (2017),

partaking angels deem the team, the market, and signs of life to be the most critical factors to

consider before investing. Hence, entrepreneurs need to develop a speech appealing to these

aspects in order to convey optimum information to investors. Participating from the early-stage

risk capital, angel investors get involved with the entrepreneur and his/her vision behind the

start-up. They seek hard working, dedicated, and united team that has the capability to deliver the

set out business strategies. Emphasizing the background of the team and knowledge and

characteristics that set the latter apart from other professionals convinces that the startup will get

through and succeed. Another important step about which the entrepreneurs need to be very clear

is to define the opportunity within the targeted market segment, which includes understanding

the size of the targeted market, the targeted consumer, and the competition. Critiques of pitching

by Hochberg et al. (2018) state that investors need to develop excellent storytelling skills in order

to come up with ideas that will effectively appeal to the intended founders. Using story to tell the

pitch will ensure that the jury remembers the pitch as well as show how it can be properly

executed. For current and future executives, it will be crucial to create a story that gives the idea

of the problem being solved by a startup, why it is important, and why only this particular startup

can provide a solution. Stories of individual customers, positive feedback, or even success

stories, all of these can be effective in making it feel more believable and convincing. According

to Van Osnabrugge and Robinson of pitching to angel, customization is critical. The source also

pointed out that the presentation that entrepreneurs provide have to be suited according to the

interests of the investor where the entrepreneurs have to show level of appreciation for the

investment criteria and portfolio of the investors in which they seek funding from. This means

having to go through potential investors and making adjustments based on their particular

preference of interest. This is particularly the case where fine details of presentation and tenor

indicate that the investor has been accorded respect for his or her time and business interests as a

result of the effort which has gone into customization. Using graphics and other graphic

depictions and figures like charts can thus, go a long way in influencing the actions of investors.

According to Gleasure & Feller (2016), simple tools such as charts, graphs, and other forms of

infographics can easily relay the information as compared to when it is in a single text format, it

allows the entrepreneur to provide concrete statistics about the market opportunity, the level of

adoption and usage, as well as estimates of revenue, profits, and growth, making the claim more

convincing. Visually, it is important to use elements just to emphasize points that have been

stated by the narrator alongside supporting them by providing additional information whenever

necessary. Based on my conclusion and assumptions, a good sales pitch should not exceed 10-15

minutes, then there should be question and answer segment. It is appropriate to create a pitch that

has a catchy title, an introduction that an audience finds interesting, definition of the challenge,

solution, the market opportunity the business model, the team, the current progress, and financial

forecasts. The text should be divided into the sections, and each section should follow the one

before it creating a coherent and persuasive increased traction intrigue that the startup should be

invested in. Therefore, practice is crucial. There are many tips on how an entrepreneur can

develop an effective pitch; one of them is that entrepreneurs should practice many times, and it is

even better if they practice in front of a group of people that can give them some feedback on

their presentation, it also enables the performance to be fine tuned in the delivery, to look for

areas of weakness and to assert confidence. Applying feedback from mentors, advisors or peers

can therefore, go a long way in enhancing the quality and quality of the delivery of the pitch. To

wrap up for now, let me say that angel investors are like any other category of investors, whose

attention and trust need to be won through engaging stories and customized pitches supported by

numbers. Entrepreneurs should focus discussions on the team, the market and its size, and the

degree of attention the start-up has attracted, and tailor the information delivered to its individual

audience in order to present a story that investors will understand. If, for example, one wants to

augment the persuasiveness of the given pitch, clarifying the structures of the presentation and

using visual means contribute to its effectiveness.

2.3. Structuring Angel Deals

The forms of structuring angel deals represent a thus, critical factor of financing models of global

innovation-oriented technology startups, moreover, when addressing the issues related to the

search for early-stage financing formats. It is important to note that Angel investors are

individuals or organizations that invest in young established companies in exchange for equity

and other privileges given the fact that they invest their own funds to support new ventures and

act as mentors to the managerial teams of such companies (Chase & Jay, 2018). Given the

demonstrated need for structuring angel deals, the goal of this work is to furthermore, extend

prior knowledge by providing an improved understanding of the processes of structuring for the

entrepreneur receiving the funds and the angel seeking to minimize risk while achieving a high

return on investment. First, structuring angel deals includes establishing the price at which to

value a startup, which can be tricky since many technological companies, which angels invest in

are still at early stages of development (Kaplan & Stromberg, 2004). Angel investors frequently

use tools like the DCF analysis or the comparable company approach, whereby the then forecasts

are compared with those of other similar businesses, in order to evaluate the current potential for

future growth and profitability (Hellmann, 2002). Establishing reasonable price is significant for

achieving the proper balance of supply and demand that is pleasant for both the entrepreneurs

and investors; in this case, both parties should receive the impression that the conditions are

lucrative for them. Also, qualified investors and their negotiable demands and conditions of the

angel investment deals involve the equity of the investment amount, the rights of the investors

and lastly, the exit strategies (Mason & Harrison 2006). Angel investors often seek equity

guarantee in some manner by demanding important clauses like anti dilution or liquidation

preferences so as to secure and maximize the returns on investment with proper risk management

(Fried & Hisrich, 1994). On the other hand, Entrepreneurs have their limitations in funding since

they must consider the ownership of the startup, the operational and strategic management.

Additionally, a specific kind of structuring of angel deals includes creating corporate project

governance and reporting formats; means of further cooperation between business initiators and

financial sponsors (Rose, 2005). This may thus,involve selecting board of directors, laying down

performance targets, and RAWR goals for the organization so that increased accountability and

disclosure is achieved (Sohl, 2003). Evaluating the ideas of effective governance thus, points to

strong relationships between stakeholders and helps the startup to implement its business plan.

The organisation of angel deals is thus, a cumbersome but undeniably crucial strategy that is

important in addressing the financing models for international technology startups. The

implementation of the right valuation techniques, fair and thorough negotiation of terms and

conditions of investment agreements, and sound choice of governance strategies would enable

the formation of proper investment partnerships between entrepreneurs and angel investors

which would give way to the formation of good investment models of the technology sector in

this highly competitive environment.

3. Venture Capital

3.1. Identifying VC Firms

Selecting the right VC firms involves understanding the distribution of the target industry, the

sectors that are of interest to the selected VC firm and other requirements that may cater for the

stage at which the startup finds itself. Like any other industry, venture capital firms have certain

characteristics, dynamics, and issues unique to each of the sectors; in fact, many VC firms may

have specialized in certain industries or verticals. For instance, technology startups may call for

investors who appreciate knowledge of the high change, often cyclical, in modern innovation and

the need to have a ready market, technology, product ready for scaling, than a healthcare startup

seeking investors with knowledge of legal hurdles, patients among other things. Although all

startups require funding from VC firms, any specific field of business must understand the

specific requirements and opportunities within that industry, thus using the field’s requirements

to select only the best VC firms with reference to successes in the specific sector. Thus, targeting

must take into consideration two dimensions, first, specialization by the industrial sector it is in,

second, the stage of development of the startup that wants to attract the VC firms. Some startups

may need investors with high risk-reward profiles that may rely on the probability of higher

returns than those required by later-stage startups, which may require investors seeking growth.

Fried & Hisrich (2017) also noted that it is imperative that startups before seeking funding from

VC firms; they need to research and ascertain which firms invest at the company’s current

development phase. This encompasses evaluation of the investment areas of interest, portfolio

firms and performance history of prospective financiers with the view of identifying merchants

who share similar goals as the startup. Industry events, conferences, and web sites are therefore,

vital sources of information for startups seeking to understand VC firms’ areas of investment

interest and the portfolio companies the investors have committed to backing, these are thus, key

platforms for accessing potential investors, getting an understanding of the relevant industry

trends as well as new trends affecting the market and potential investment opportunities.

Therefore through attending events exclusive to industries, and via the use of online sites such as

Crunchbase and Pitchbook, an entrepreneur not only opens up avenues to reach out for new

investors but also gains visibility as well as information on the potential investors. Also, since

most seed stage startups are established by their founder, they can use personal connections and

ask for introductions to potential investors from mentors, advisors, and fellow founders.

Gompers & Lerner (2016) also stress the role of social networks in the VC industry, arguing that

contacting with the investor will have greater chances to be seen and noticed. Thus, using

entrepreneurs’ circle of contacts, the business people have the opportunity to receive refinement

and recommendations that can transfer them to possible investment opportunities. When

potential VC firms have been chosen, business proprietors ought to ensure that they sell the

investor on their business and ensure that their goals are in tandem with that of the investment

firm. This format thus, entails painting the value proposition, target market, and prospects for

growth and revenue in simple and appealing terms. Cultivating good relationships with the

possible investors is hence, crucial as it helps find funds and partners for the startup to achieve

their growth goals. Coming to the fundraising exercise as a partnership is vital for startups to

undergo the process in recognising investors as strategic partners who they can relate with and

share information with. That is by keeping them informed on the progress through giving them

feedbacks, updates on achievements, and also soliciting for their opinion where necessary.

Startups can get more prospects for the funding and other forms of support as to their growth

plans if they cultivate the relations with the existing investors. Thus, focusing on the right type of

VC firms and the networking with prospective investors are effective steps, on which startups

have to focus as they search for capital. Hence, the skills of networking, prompter researches,

and the determination of interest of the targeted investor enable startups get the required

investment to fulfill their strategic goals and objectives. Mapping the terrain of VC investment,

and using it to one’s advantage, is therefore, an important way through which startups can get the

funding they need when they need it.

3.2. VC Funding Stages

It is therefore considerably important to comprehend the various stages of venture capital (VC)

funding being one of the most important fundamental foundations that may help startups if not

enable them to properly to the course for fundraising. This journey therefore, unfolds across

various stages: venture capital financing which can be classified into initial rounds (sometimes

called first-stage rounds which are Series A and Series B), subsequent rounds, also known as the

later-stage rounds (Series C and the subsequent rounds or the later rounds) (Da Rin et al. , 2013).

Each stage is closely linked with the specific level of firm development, the inherent risk level

and businesses funding requirements. Initially, seed funding is used to test the merits of the

startup concept, to develop a basic product prototype, and to gain initial proof that an

organization or its product is needed and useful by customers (Harrison and Mason, 2017).

Venture capital funding represents a pivotal phase that is quintessentially taken by the capacity to

progress through the continuum of scale up, to expand the customer base and trigger revenue

growth: known as Series A and Series B. Here , the focus shifts from basic recognition to more

meaningful and massive scale-up, setting the stage for growth and outreach. The later funding

rounds starting from Series C and onwards are more focused on spurring growth, entering a new

line of business or a completely new domain, and achieving key levels of profitability or cash

flow (Mason & Stark, 2018). Embedded in this narrative is the fact that there is need for the

entrepreneur to tweak the manner in which he accesses funds as well as fine-tune how he sells

himself in front of investors and ensuring that the goals and achievement associated with each

funding stage are aligned in a manner that enhance harmonization (Wasserman, 2012). If a target

is to achieve the highest possible growth rate as quickly as possible, it is worth focusing on

attracting funding commensurate with the stage of development: in this case, the prospects for

startups are truly boundless – they will reveal the path to a successful future. As seed funding

literally means incubation funding, compared to the birth image, it sets the tone and the first

stone of the building of the future. It is more than a mere infusion of capital because seed

funding gives the much-needed shot in the arm to the startup towards the creation of a viable

minimum viable product and the creation of the first set of customers. It is therefore, here that

the vision starts acquiring a more tangible form, thus serving as a foundation for the subsequent

steps and cycles of growth and enhancement. Moving to the funding in early-stage, which marks

a key turning point where startups go from validation toward the growth phase. New success

funding rounds, such as, Series A and Series B financing provide the required capital for

business expansion, investing in enhanced infrastructure, and even developing more aggressive

client acquisition tactics. With early-stage funding, startups can thus, take the advantage and

build the necessary capabilities to strengthen their position in a market and plan for continued,

steady revenue growth. Series C and higher are later rounds, which depict the climax of a

company’s growth, also concerned with market control and rapid growth. Sometimes, funding is

applied strategically, completed in stages with an intention to strengthen a startup’s position in

certain segments of a market which has already been tested and vetted by the previous funding

rounds. Series C in particular is used for marketshare gain, geographical expansion, and critical

acquisitions to take the startup to the doorstep of break-even and M&A events. Thus, the general

picture of VC funding altogether can be discussed as an evolutionary, progressive, and even

goal-oriented process. From seed money to the zenith of the later rounds there are different

scenarios we can talk about, which predefined by certain features of a stage. Through careful

pursuit of this trajectory with vision, flexibility, and skill, startups can hence, bring out the best

in their fundraising efforts, which will also ensure virtuous growth in the ecosystem.

3.3. Negotiating VC Terms

Entering into VC conditions is a little like being on a tight rope; getting funding on the one hand

and ownership and control on the other hand is a very delicate subject. Venture capitalists being

aware of the risks involved, always try to protect their investments and secure high returns on

their investments by having bargaining control over the investment structures. Some of most

significant of these are the factors such as the issue price, the provision for payout in case of

liquidation and the provision for the director’s seat (Kaplan & Stromberg, 2004). For the target

market of entrepreneurs, it means that any negotiation requires an appreciation for the value of

the company, the expected revenues in the future, as well as prospects of other funding

opportunities (Wasserman, 2018). Consistent with this idea Kaplan et al. (2016) demonstrated

that these early-stage valuations are thus, highly relevant to later-stage dilution levels,

reinforcing the need for careful consideration of valuation negotiations by entrepreneurs. In line

with two prime pillars, one finds a middle ground between valuation and ownership share as a

key strategic approach that guarantees that entrepreneurs maintain respectable stakes in the

venture while, at the same time, exerting considerable control (Ahlers et al. , 2015). As the

journey to secure VC funding entails undergoing the maze of the negotiation process, legal

expertise and legal advice are crucial in understanding the term sheets and bring about the most

favorable results (Murray, 2020). Legal knowledge also assists owners in paying close attention

to compliance and understanding elements of contracts that may work to their disadvantage or

take their best interests in the long run into account when negotiating with an investor.

Moreover, promoting the necessity and talking about such a culture of openness creates trust and

a collective spirit between entrepreneurs and investors (Rosemarin & Dumont, 2020). Thus,

although the negotiating of VC terms is a financial exchange which is far from the concept of

arms-length transactions, it can be described as a win-win relationship based on trust,

commitment, and understanding of both parties’ goals. In this manner, negotiations in a strategic

context provide an opportunity to obtain the necessary financial resources to advance an

entrepreneurial growth trajectory, with the preservation of equity and control over business

activities as a hedge against losses and other risks.

4. Crowdfunding

4.1. Platforms Overview

Other financing models have therefore, emerged in the form of online crowdfunding platforms,

bringing a fresh approach to funding compared to the centuries-old practice of traditional

funding methods. The firms that are involved in crowdfunding include Kickstarter and Indiegogo

which have played significant roles in changing the approaches, which are adopted by the

aspiring entrepreneurs, artists and innovators towards sourcing for capital for their projects. As

these generalist platforms act as one-stop shops where creators can showcase their ideas and seek

funding, those with creative ideas across virtually all fields stand a good chance of both gaining

visibility and getting funding for their projects. There are new trends in crowdfunding, related to

the existence of specific target platforms that offer crowdfunding for definite categories of

startups and projects. These platforms are more niche in that they include industry specific, cause

related or the demographic in question, giving those who create the campaigns a far more

focused method of fundraising. For instance, DonorsChoose deals with educational projects in

school only while Crowdcube solely zeroes in on equity crowdfunding targeting new start-ups or

small businesses. Specifically, it indicates that when a platform is specific and targeted, there is

more congruence between content-providers and the consumers of content because people are

likely to flock to a station that a) they have passion for or b) is devoted to a subject that sparks

their interest. When the creators turn to a crowdfunding platform then they find themselves lost

in the sea of available platforms that are available online which have a different number of

features and many other charges and different kind of target audience. Among the crucial factors,

it is essential for creators to consider fee-related aspects in any platforms and services, such as

initial setup costs, per-transaction cost, and commissions charged by the platforms. Some of the

platforms only allow for funding for specific projects and the creator only receives the money if

the funding goal is achieved, otherwise, no money is provided While others allow the funding

wherein the creator gets to keep even the meager amount yet they charge high fees. Audience

demographics are also significant because creators have to weigh if the audience meets their

target or subscriber base for a certain platform. Analyzing the market audience also will assist

creators to tailor their directing efforts more appealing to viewers, to find the approach in

reaching more backers, and to increase the campaign’s exposure. In addition, there is the need

for creators to assess prior campaign efficacy concerning the platform in question and a

revolutionary’s tally of successful endeavors. Observed measures like, success of the campaign,

average amount of funding received and, length of the campaign tend to give good information

about the utility of the platform for a specific cause. Choosing the appropriate crowfunding

platform is therefore, a business decision that involves weighing some key factors such as the fee

charged, the concentration of the targeted consumers, and previous record of the promotion.

When selecting a platform to fund one’s project, there are steps that need to be taken, as well as

certain guidelines that should be followed in order to utilize crowdfunded resources most

effectively and increase the likelihood of success with a particular type of project or audience.

4.2. Campaign Strategies

To make a successful crowdfunding campaign one needs a concise and harmonious interplay of

the factors such as, the use of storytelling in the campaign, proactive contacting of potential

backers and, strategic marketing approaches. As the cornerstone of this complex strategy, the

creation of a powerful story is placed in the forefront; the storytelling is to be a web of

connections that would chime with the target investors. The points mentioned in this narrative

should not just list down the basic facets of the project but instead, the focus should shift towards

what need this proposed project is going to address, what differentiates it from other similar

projects, and what kind of change the proposed solution intends to bring. In outlining and

presenting a story, or an argument that resonates emotionally with the audience, any given

creator is capable of engagement and getting the audience interested with curiosity. A

fundamental concept and major driver of any crowdfunding campaign, the initial base of

supporters must be defined within the creator population. The first two supporters act as trail-

blazers, setting the pace for the rest of the outgrowths to follow and increase support for the

campaign. Promising attractive bonuses at different tiers of funding furthermore, provides even

greater motivation to embrace the project and contribute so that others can help achieve the

ultimate goal of the project. Being gifts, reimbursement, and indulgence that go beyond the

typical perks of funding a project, these rewards do more than thank the backers—they give the

campaign an air of prestige and worth. It is therefore, essential to engage people in the early

stages of a crowdfunding campaign and bring new audiences to the project, which requires a

complex communication strategy across various platforms and media. The social media

platforms thus, provide immensely useful support for the mission, providing the creator with a

constantly evolving stage for the message and an opportunity to reach a larger audience. With the

help of targeted ads and proper content, hashtags will expand the coverage of the campaign and

hence, attract more people and backers. Engaging with other influencers or media houses with

large followerships can thus, help lend credibility and reach, enlisting larger communities that

support the cause to help spread the word. Peculiarly, even during the actual campaign,

continuous interaction with backers, and keeping them updated on the project’s progress is

crucial. The use of stat updates and progress reports acts as the primary way of partly revealing

what is happening and creates a feeling of participation among supporters. While most people

would understand this to mean maintaining contact and zeal in one’s backers, what it actually

entails is creating the basis of the relationship outside of the campaign by maintaining

consistency and being honest. All in all, the profiling of a successful crowdfunding campaign

seems to go beyond the conception and the mere pitch of a fantastic idea: it seems to require the

interplay of a well-told story, a well-coordinated appeal, and marketing virtuosity. Thus, using

concepts such as storytelling, the formation of a lead-creator group, and a multiple- touchpoint

strategy, investors can be confident when fundraising through crowdfunding platforms, as well

as through exploring the potential of crowd collaboration in making dreams a reality.

4.3. Post-Campaign Management

Moreover, although crowdfunding facilitates a targeted and personalized way to gather the

needed funding, it is crucial to look beyond the funding goal achieved to manage a project

reward-based campaign and maintain backers’ satisfaction. For this reason, creators must remain

socially engaged with their backers by periodically updating them progress on development,

production and any constraints faced and hence ensuring they deliver their promise to the

backers. Maintaining such a conversation over an extended period therefore, promotes the

culture of trust and encourages Project Pulusa’s backers to know that their support was helpful

and constructive. The following are some of the important factors to be discussed implementing

a strong fulfillment plan: tijdens het uitvoeren van diepte optreden dient er op te worden gefocust

om de beloningen te kunnen verlenen aan de fans in een efficiënte en gecontroleerde wijze.

Managers must pay a lot of attention to each step of the fulfilment process to ensure that

everything related to production, shipping, and distribution is done flawlessly, and the backers

get their rewards promptly. It is crucial that all the communication on the pledge fulfillment and

overall delivery time and any changes pertaining to that should be clear and consistent so that the

backers should not lose faith in the project. This takes me to the next consideration which is in

addition to ensuring that creators provide fulfilment rewards, they ought to cultivate for the

campaign community. Staying connected with backers with simple and relatively complex

features such as exclusive content, behind the scenes, and feedback for the project enhances the

bond between the creators and backers. With the help of practice, the authors can make the faith

and contributions of supporters habitual, instead of one-time and conditional, turning backers

into enthusiasts and promoters of the campaign. The creators should use the key indicators of

the popularity of the campaign to attract more attention and thus, increase support. Accounts of

how the facilities worked, personal stories, and quotes from other media sources should be

utilized for promoting the project to new supporters or clients. That is why to inform people

about the activities performed and the results of the project, creators should also tell about their

experience and the influences received during its creation. Another area of post-campaign

management is proper spending of budgets that has to be as wise as the campaign itself. Funds

for rewards literally has to be managed more carefully in order to pay for all these creations, the

cost of the creation itself, as well as for further development or marketing campaigns. Please

bear in mind that any resource should be spent wisely, for proper promotion of crowdfunding

campaign and for further project sustainability.

5. Government Grants

5.1. Available Programs

Financial assistance programs thus, known as direct government grants are vital instruments that

support projects that are public intentions important due to the necessity to enhance social needs,

inventions, and the economy, such diverse programs include a wide ranging spectrum of sectors,

each to cater certain aims. As identified in the Congressional Research Service report

spearheaded by Smith (2020), federal grants program addresses nearly every sector ranging from

education and health to infrastructure and research. The Small Business Innovation Research

(SBIR) program provides grants for small businesses to promote innovation in technology and

support the development of new technologies. Likewise, the Department of Education also

provides funds for grants to help institutions in strengthening the positive student learning and

improve the equality in education (Department of Education, 2020). Additionally, for the grant

offered by the government, it is always common to find out that those programs offer grants to

those who seek them for purposes of undertaking projects that address the state’s policies as well

as the needs of the society. For example, the grants provided by the environmental agencies are

towards promoting renewable energy initiatives and cutting down on emissions of greenhouse

gases (EPA, 2020). These grant programs, therefore, positively reshape grant objectives since

they address urgent areas of concern as they help to develop sectors of focus throughout the

country, and encourage cross-disciplinary approach and ideas cross- fertilization. Although there

are grant programs funded by the government, it can still be highly problematic to ‘get the grant’

especially if one is applying on behalf of a business or any non-profit organisation. Gupta and

Lad’s (2018) study has revealed that lack of information of grants, cumbersome procedures, and

difficult categories for eligibility are thus, some major challenges to grant procurement. Also, it

is known that grant competitions may be highly competitive because there may be many

interested organizations, all of which can apply for a grant with a limited amount of funds

(Rousseau & de Bruin, 2019). Hence, grants may be distributed unevenly across the population;

some groups or zones might receive less funding while certain others enjoy the grants more,

which leads to the increase in social inequalities. Grant funding is therefore, an essential tool of

government interventions and initiatives meant to enhance the various fields and sectors, in the

process helping to solve social issues and spur innovation. More, however, must be done in the

ways of purging barriers and simplifying the process through which those in want of such

funding can get in touch with the available programs to ensure that it is not only the large firms

benefiting from them but also smaller firms and organizations of other forms.

5.2. Application Process

It is generally advisable to seek federal grants and concerns that emanate from the application

processes could takeover a significant portion of an organization’s resources. Comprehending the

special thrusts and processes of the funding agency is therefore, vital to improve the probability

of grant proposal approval. As stated by Johnson et al. (2018), the application process is

generally composed of several main steps, every of which has related thorough requisites and

definite time restrictions. Additionally, several steps should be adhered to including; First of all,

applicants should conduct research to find out grant opportunities that are available on the

market and that would be best suited for the goals and objectives of their particular project. This

can involve assessing the rules of the funding agency regarding the funding available for the

project, who is eligible for the funding, what kind of projects are preferred by the funding agency

as well as the procedures for applying for the funding (Smith & Jones, 2020). Documentation

and items necessary for the preparation of grant program should be collected before the program

is selected and thoroughly analyzed. Some of the common documents in the application package

are; The project proposal which should contain a description of the project goals/ objective,

detailed methodology or work plan and expected results of the project, and the budget which will

show how the grant funds will be expended (Department of Treasury, 2021). Moreover,

proponents may be asked to submit further information like the organizational resumes, letters

from stakeholders indicating their endorsement, and certifications on conformity to the laid down

legal standards (Smith & Brown, 2019). After the application is filed-complete, it must be

submitted by the appointed deadline using either an electronic application system or by

requesting a paper form from the relevant place of address. It is crucial that all papers needed by

the application are attached, and the application is submitted in the recommended format to

disqualify the application (NIH, 2020). Once it has been submitted, an application will be

reviewed with consideration of factors like the scientific rigor of the proposal, its practicality,

and the likelihood of being attained within the frameworks of the program among others. MSCA

application requests to foster efficient communication with the funding agency throughout the

application process. Concerning the application process or the procedures and requirements that

are not well understood, the applicant is supposed to seek clarification on the issue from EPA

(2018). It is thus, crucial to get to know the program officers, as well as seeking out their

comments about drafts of proposals, for it can enhance the quality of the application and

augment chances of success.

5.3. Compliance and Reporting

The longstanding elements of compliance and reporting are central to government granting as

accountability, correlativity, and the correct usage of combinative funds are significant elements

to the taxing public such as taxpayers. The grantees are usually expected to heed certain set

standards and policies as prescribed by the granting agency for the entire calendar period of the

grant (Office of Management and Budget, 2019). This thus, involves ensuring policies on

financial reporting, discretionary spending, sourcing and the coordination of overall program

responsibilities in accordance with applicable legal and regulatory provisions. Financial

reporting is therefore, one of the most important compliance requirements for grant recipients,

which entails the process of sending notifications on the money usage. This may involve

producing and submitting reports such as balance sheets, expenditure reports, and audit reports to

show compliance with the legal requisitioned spending limits and the generally accepted

accounting principles (GAO, 2020). Furthermore grants’ management and administration also

involve requirements such as proper documentation of expenditure and/or receipt as a way of

easing monitoring and auditing by the prospective donor. Apart from financial reporting, ME&T

grant recipients are also required to prepare and submit programmatic reports on the status and

impact of activities supported by the grant, among other things. It entails things like KPIs and

project deliverables, goals met within a particular period as well as any obstacles faced as well as

variances from the project plan implementation schedule (Department of Justice, 2021). The

articulation of programmatic reporting is thus, another way through which funding agencies can

evaluate the impact of funded projects or initiatives and guarantee compliance with laws and

goals in relation to an agency’s programs and grants. Additionally, the grants received can be

accompanied by compliance assessments, investigations, or inspections in the form of reviews,

audits, or site visits performed by the funding agency or its representatives and/or independent

auditors (National Science Foundation, 2018). Some of the advantages of grant reviews as

mentioned in the research article include; Grant reviews assist in confirming that the terms and

conditions of the grants have been met, help in the identification of risk or non-compliance and

are useful in the determination of the authenticity of grants. Lack of compliance with the

requirements specified in the grant can pose a threat of fines, loss of funding or even complete

cancellation of the grant contract (Department of Health and Human Services, 2020). Hence,

grant holders must keep proper records, ensure compliance with reporting schedules, and

promptly respond to any complications that funding providers have.

6. Corporate Partnerships

6.1. Strategic Alliances

In the context of the corporate partnerships, strategic alliances can be defined as joint business

relationships between two or more companies that seek to achieve a specific aim and objective.

These strategic partnerships can occur in many formats such as international strategic alliances,

international joint ventures, co-branding strategies, and collaborative research (Tesar et al. ,

2017). Strategic alliance major goals are to utilize the competitive capabilities of each member to

develop added value that cannot be produced by any single member. Strategic alliance thus,

entails the cooperation between firms in gaining competitive advantage in specific functions and

includes technology firms’ involvement of academic institutions in developing research and

development projects. Industry-oriented research alliances are strategic connections between

business industries and academic institutions where institutions provide knowledge and

resources, and industries provide experience and industry problems to solve (Mowery et al. ,

2019). Moreover, operating synergies such as formation of alliances between the companies

functioning in two distinct geographical locations may also enable the companies to improve its

market reach and get closer to its targeted consumer base (Gulati, 2018). However, strategic

alliance is not an easy process and it has been found that there are certain risks in strategic

alliance namely; Cultural differences: The partners of an alliance do not necessarily have to share

the same culture and they might differ in terms of goals, objectives and decision making. There

should be a good rapport, understanding and strength of the working relationship between the

organisational partners for effective collaboration in addressing barriers of effective

communication in an alliance. Also, goal, roles and responsibilities must be understood well in

order to bring about congruence of purpose for the benefit of the alliance partners and prevent

drift from the intended goals of the alliance. The issue of strategic alliances therefore, plays an

important role in working out the conditions and the means of cooperation between partnering

companies. Strategic decisions and plans may be given but relationship management,

communication, and mutual issue before entering into an alliance may be viewed as potential

pitfalls to strategic alliance success but should be viewed as opportunities for mutual rewards.

6.2. Partnership Agreements

The partnership agreements are thus, legal contracts that outline the legal relations, stipulations,

as well as responsibilities for any two or more individuals or companies. Such are important in

setting expectations, Differentiating authority, depicting power and to avoid and prevent

probable conflicts or legal cases (DeMott, 2017). There are often terms of partnership which

include structure and operational policies, rules of decision-making, Management of capital and

Contingency measures that are observed in partnerships. A good partnership should depict the

purposes, roles, and tasks of the partners and the desired result and/or outcome of the functions

that are to be performed by the partners (Khan, 2019). Last but not least, the rights and

obligations that entitle the parties engaged in the joint venture and their level of commitment

which includes offering more tangible recourses, ownership of rights, and duty to maintain

confidentiality (Davies & Wolff, 2020). This assists in providing that all the parties are fully

aware of their responsibilities and this and their undertakings thereby minimizing chances of

strife. Also, possible management arrangements contain factors regarding decision-making and

the scope of the governance system to support partnership between different partners (Gale et al.

, 2018). This can range from setting up standing, ad hoc, strategic committees, project or work

teams, and/or advisory and oversight boards whose major tasks are to be responsible for

administration and coordination of the partnership in addition to assessing the general progress

as well as making relevant strategic decisions (Hoffman & Macaulay, 2018). Accompanying the

governance and decision-making structures, the partnership agreement will also include

provisions on the available funding to each partner, mechanisms for revenue sharing between

partners, and provisions on liability, among others (Schafer & Sejersen, 2019). It is very

important for a corporation to demystify the financial issues for the purpose of preventing the

mishandling of funds or disagreements involving the use of financial resources. Partnership

agreements are therefore, useful strategies by which business partners can cement their

relationships as well as lay down the arena in which partnership will be coordinated in the event

that disputes arise. This paper thus, aims to outline how through the description of the roles,

tasks, and subsequent obligations, partnership agreements create a foundation for the formation

of trust, decrease the level of uncertainty, and generate a positive effect on the sustainability and

development of partnerships.

6.3. Long-term Collaboration

Enduring partnerships in the corporate context are defined as a continuous partnership between

two or more organisations working together on mutually agreed goals with the aim to attain them

in the long term. These partnerships tend to involve high levels of interdependence that require

high levels of commitment to achieve a common end goal in order to tackle various challenges

(Gulati et al. , 2019). The concept of long-term relationship viewed within the lenses of business

partnerships is about trust, similarity in the organizational culture, and the focus on improving

the value of the partnership for all the participants of the partnership process. For example, long-

term enduring relationships between the pharma business and the research centers for growth of

new products or service. These collaborations demand time, people’s effort, and resources

meaning that partners or affiliate organizations must be ready to share costs and profits (Puranam

& Vanneste, 2018). By engaging in a long term strategic relationship, both partners can deepen

the value proposition of their stakeholders through an ability to bring new products to the market

much faster than acting independently. However, it can be difficult to sustain long-term

partnerships in the long run because sustaining a good working relationship is not an easy thing

to do especially where the business environment is complex and unpredictable. There are various

reasons why partners may have to evolve and transform their partnership configurations

periodically; changes in market environments, changes in technology and the influence of

stakeholder expectations may at one time warrant such changes (Lavie & Rosenkopf, 2020).

Thus, building long-term relations, as well as overcoming various obstacles, always requires

timely and accurate communication flows, ability to adjust, as well as flexible goals and

willingness for compromise. Furthermore, brand architecture in long-term strategic partnerships

should have a strategic fit or convergence of objectives among players in the network (Doz and

Hamel,2017). It entails identification of adequate and measurable targets, mechanisms of

supervision, and process of resolving emerging complications and differences (Zaheer & Bell,

2018). Besides, developing open communication and constructive interpersonal relations with

other partners and creating favorable conditions for trust and respect are important for sustain the

long term relationships, as well as ensuring continuous interest and involvement of partners

(Heimeriks & Duysters, 2020). Sustainable partnership is therefore, a critical pillar for creating

value, building long-term partnership and solving multifaceted problem within the realm of

corporate partnerships. Through the approaches of building trust between partners as well as

equal distribution of risk and rewards and unrelenting focus on value creation, partners can lay

down strong foundation for sustainable partnerships that yield sustainable results.

7. Initial Public Offering (IPO)

7.1. Preparing for IPO

IPO stands for general public when a company gearing up for an IPO can be considered a critical

developmental stage that separates the company from the private sector. This shift is more than

an inking of monumental change for the company and its stakeholders, it thus, requires strategic

and detailed solution to address all of the issues related to moving from the private to the public

markets space. That is why, here, we are going to talk about the IPO process – which will be the

focus of our work – and stress that it entails numerous and diverse stages, which need to be

managed and coordinated both by the issuing company and its advisors. Another essential

component of the preparatory process for such a listing is to first guarantee that the company is

financially sound and operationally clean. This entails critically evaluating the company’s

financial reports and the internal check mechanisms to ensure they conform to the strict legal

requirements of the regulators and the future financial collectors (DePamphilis, 2019). This

process involves adequate financial review of the financial structure, stringent audits of the

financial statements, and proper accounting and reporting mechanisms that are essential in the

business (Ritter & Welch, 2015). Furthermore, there will be additional need for operational

adaptation, optimization of activities, and the reinforcement of the firms’ corporate management

to improve the level of disclosure, accountability, and investors’ trust (Doidge et al. , 2017).

Besides, the issue of the financial status and reserves, the founders, in turn, need to come up with

a great story and develop a unique value proposition that would help to attract investors’

attention and set up the company vs competitors. This includes the identification of the

company’s development plan, how it will compete in the market, and the market need it will

address (Gounaris et al. , 2018, p. 154). It is important to establish clear and logical concept on

creating the respective messages that would appeal to the investors. Furthermore, through road

shows and investor meetings, companies make an attempt to sell shareholders ‘penny’ and create

interest in the offering as mentioned by Chen and Ritter (2018) Market position, which is another

key consideration during the IPO preparation process, is also a crucial element that must reflect

strategic planning for the company’s future development. It is crucial that companies undertake a

valuable analysis of the market place and competitor activity, as well as investor sentiment to

determine the best time for firms to go-public and the right valuation. It may include market

analysis, identifying the prospects for the offering in the existing conditions, and comparing the

strategic company’s experience with the experiences of competitors and peers to identify the best

time for the offering (Schultz et al. , 2018). In addition, different problems related to the matter

arise: the focus on setting proper strategic price, as the issue of creating the maximum value

while taking into account the company’s ability to achieve outstanding results in the aftermarket

and garner investor support. Judging by the IPO process, it is also crucial to alternate the

compliance and legal manager skillfully.

7.2. Regulatory Requirements

Understanding and compliance with the regulations have been considered another critical step in

the IPO process since IPOs involve legal compliance with the laws, regulations and listing

standards set by the regulatory authorities and listing demands of different stock exchanges.

Evaluating the need for regulatory compliance brings out the fact that it forms the firm

foundation encouraging transparency and in the same process protecting the investors as well as

the overall integrity of capital instruments (Field & Karpoff, 2002). Another imperative

component to analyze before going public through the IPO mechanism is compliance with

securities laws and regulations, of which the most critical are section 1933 Act and section 1934

Act (Cohen et al. , 2018). These two pillars laws may define the requirement for the completion

of registration, offering and sale of securities to the public while it provides the legal framework

for regulation of corporations, it requires organizations to provide material and truthful

information to shareholders (Coffee, 2017). Moreover, those companies in the initial stages of

wishing to list their equity in the public domain they have to meet listing requirements developed

by regulatory stock markets such as the NYSE or the NASDAQ stock exchange (Kim & Ritter,

1999). These norms therefore, cover items like corporate governance, accounting and all kinds of

reporting, and minimum price floor requirements, all of which are thus, aimed at enhancing the

protection of investors and maintaining the credibility of the exchange. In addition, several

others including interactions with a regulatory body like the Securities and Exchange

Commission (SEC) is necessary to gain approval for the IPO and also meet set legal

requirements (Freedman & Griffith, 2019). To do this, one has to prepare a registration statement

that must be filed with the SEC and followed by an elaborated examination and modification

process whereby the registrant company responds to questions or concerns that the SEC may

have on the information provided in the registration statement. In other words, preparing for

regulatory compliance is a core aspect of the IPO process that firms must ensure they adhere to

securities laws, listing standards, and statutory rules and regulations set out by governments and

stock exchange bodies. Thus, observing and following the rules and regulations of the particular

country can help companies gain investor confidence and make necessary adjustments for their

initial public offering.

7.3. Post-IPO Management

Management after IPO is a another strategic era in the existence of a company that floats its

shares in the public and this is after going through an IPO where the company graduates from

being a private firm to that of a public one (Hostager & A Scarlet, 1989). Another important

aspect that firms need to consider in the post-IPO stage is the ability to sustain efficient corporate

management mechanisms that will employ correct strategies and keep investors informed and

assured (Gillan & Starks, 2007). This may include appointing a board of directors with relevant

experience and independence, along with fine-tuned internal controls and risks management to

enhance the new approvals’ ethical tone (McKinsey & Company, 2017). In addition, firms have

to Organisation for Economic Cooperation and Development grow, change the way in which it

supplies, converts and reports information to conform to the demands of a public market and

regulatory agencies (Lyon & Barber, 1997). This has involved the disclosure of correct and

timely financial statements, details of events that may be relevant to the investment decision and

any other relevant information (Loughran & McDonald, 2014). Noncompliance with the

reporting requirements may therefore, lead to several unfavorable legal and regulatory outcomes

that hurt the reputation and investors’ confidence. However, post-IPO management extends to

other areas which may include corporate governance, financial reporting and management of the

novelties associated with operation as a public limited company (Jain & Kini, 1999). This may

thus, include the following: fulfilling the expectations of the shareholders, escalating market

fluctuation as well as the aggressiveness of shareholders, and long-term opportunities for

corporate value generation (Gopalan et al. , 2020). This paper aims at appreciating the

importance of market access and the roles played by investor relations and analyst in maintaining

the credibility of the public markets. Thus, post-IPO management is one of the major stages in

enterprise’s development after IPO, which imply proper management structure, financial

reporting, and cooperation with stakeholders in order to meet possible challenges and contribute

to the accretion of shareholders’ value.

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