All Startup Businesses Need to Know About Funding

You certainly often hear about startup companies. If you are familiar with Tokopedia, Ruangguru, Cermati, Traveloka, dadupoker or Go-Jek, they are some example of successful startup companies in Indonesia. Following the success of those startups in Indonesia, many people now want to set up their own startups and pour their business ideas.

However, having desire and ideas alone are not enough. One important element to starting a startup is funding. There are several stages in startup funding. A big investor might be able to fund all stages, but sometimes an investor only funds certain stages and the startup company must find other investors to continue with the funding.

Most common types of startup funding

  1. Pre-Seed Funding

Pre-seed funding is the initial stage for startups in order to raise funds. At this stage, the startup company introduces their business model and its potentials. The investors involved in this stage can be family or relatives, angels, and accelerators. Usually, at this pre-seed stage, a startup will receive a small investment that is useful to start a business process.

  1. Seed Funding
Seed Funding
Seed Funding

Still classified as the initial stage in funding. At this stage the capital from investors is usually intended to help startups to move from the product development process.

The funding in this stage will generally help in recruiting competent staff and renting or setting up offices. It is also time to pay attention to the early results and identify whether the products has addressed the right market. For investors, it is time to pay attention to whether the startup has been run according to the target and expectation. Investors at this stage usually come from angels, venture capitalists, and accelerators.

  1. Series A

This is the stage where startups already have several flagship products with many customers. However, startups still need to continue with innovation to expand their business. The key to funding at this stage is finding the right venture capitalists and also looking for suitable partners.

  1. Series B

At this stage, startups usually have been 2-4 years old, which is marked by having a regular customer base that generates profits. The purpose of funding at this stage is to maximize market and business expansion.

  1. Series C

At this stage, funding is used to make a massive expansion of products, as well as the market, namely by opening branches, both nationally and internationally. Investors who provide funding at this stage are usually banks, private equity entities, capitalists’ ventures, as well as hedge funds.

  1. Initial Public Offering (IPO)
Initial Public Offering (IPO)
Initial Public Offering (IPO)

The IPO is the final stage in startup funding. At this stage, startup shares are sold openly on the stock exchange. Normally, a startup needs a minimum of 5-10 years to reach IPO stage.

Definition and Development of Startup Industry in Indonesia

The application of technology, especially internet, in the business world gives anyone ability to start a business easily and quickly. Especially in the past few years, Indonesia has been in the ‘startup’ euphoria phase where more and more young entrepreneurs create a ‘startup’ business with unlimited innovation and creativity.
The term ‘startup’ also becomes very popular among entrepreneurs, but not it seems many people do not know the meaning of it. Let’s discuss further the definition of startup.

What Is Startup?

What Is Startup
What Is Startup

Basically startup is a company that runs under 5 years, or a company that has just started. But around the 2000s since the ‘dot-com’ industry started to be popular, the definition of ‘startup’ in the business world has changed. In the past, startup is a new company, but at present startup company is more about a new business that is applying technological innovation to run its core business and solve a problem in the community.

How Is The Development Of Startup Businesses In Indonesia?

The development of startup businesses in Indonesia is growing excitedly along with the development of technology. There are at least 4 biggest startups from Indonesia, namely Traveloka, Tokopedia, , https://hokiku88.org/ and GO-JEK. Data from Tech In Asia shows that in the second quarter of 2017, the domination of startup in Indonesia come from the E-Commerce and Fintech industry.
Although according to statistics, the number of new startups has decreased in 2017, but it has an increase in the amount of funding for accelerator program in 2017. It brings a positive impact for Indonesia, many investors has begun to see the potential of Indonesian startup businesses, like in the United States or China.

How To Define A Startup Company?

In accordance with the above definition, startup has a disruptive nature in an existing industry. For example in the transportation field in Indonesia. Before the presence of online transportation services, conventional taxi was one of the big players in this industry. Now if there is a new conventional taxi company established, it cannot be called a startup company for its lack of technology, although it is still under 5 years old. But if an online taxi company appears, this is what we call startup company as it runs its core business using technological innovations.

The Differences Between Startup And Online Shop

The Differences Between Startup And Online Shop
The Differences Between Startup And Online Shop

Although both type of business mainly working on information technology, those two are completely different things. Even when online shops have website, but they cannot be called startup. According to Forbes, the definition of startup also contains ‘solving problems’ in the community. Like online transportation which come as a solution for practical and convenience way to go places.

4 Main Types of Internet Marketing

Internet marketing is a method to promote products or services that becomes popular recently and it grows bigger than the traditional marketing. With various option of social media and the way people execute online marketing, it makes internet marketing a broad term to describe. To help you get the idea of how internet marketing works, here are some of the most popular type of internet marketing you need to know about.

Search Engine Marketing (SEM)

Search Engine Marketing (SEM)
Search Engine Marketing (SEM)

Search Engine Marketing or SEM is an effort to keep your site on top rank of search engine result. It will make users find you easily and lead them to visit your site or view your products. You can apply SEO (Search Engine Optimization) system in your website, which include having content with certain keywords that are most likely used by people in the search engine. Apart from that you can also use paid search platforms like the one provided by Google called Google Adwords.

Pay Per Click (PPC)

Pay Per Click (PPC)
Pay Per Click (PPC)

PPC is a way of promoting your products or services by generating clicks on the advertisement you put online. Everytime your ads is clicked, you pay a small fee to the search engine. There are two type of PPC, namely search ads and display ads.

Search ads type will put your ads at the top of the search results whenever users enter certain keywords related to your products. You can use PPC platforms such as Google AdWords or Bing Ads. While display ads type allow your ads to be put in various sites from Facebook, Google AdSense, Instagram, Quora Ads, LinkedIn Ads, and many more. For example, your ads will be appeared on users’ Facebook feed when they open their Facebook account even they are not looking for your products. It is a great way to raise product awareness, and next time users need products like you sell they will tend to refer to you.

Social Media

Social Media
Social Media

Social media is an effective way to promote your products, it can be done organically or paid advertising. You can also either use it for branding or direct sales. The flexibility of social media and its effetiveness makes it the most popular platform for digital marketing. Some big players of social media include Facebook, Instagram, Twitter, Pinterest, and also Snapchat and Tumblr.

Email Marketing

Email Marketing
Email Marketing

It is important to have list of emails of your customers or potential customers. Through email you can share special offers or discounts, catalogue, new release, and many more. The goal of email marketing is to keep your products in the users mind and address them personally.