The Hidden Magic of Startup Funding

Why would someone spend large amount of money in a company that doesn’t get any profit at first glance? Startup funding seems nonsense not only from people far from the business world but also from a lot of people of the business world: this is neither common sense nor financial textbook case.

Startups funding is not intuitive

So please be reassured you are not alone. Startup funding is not very technical, yet it requires a certain level of understanding of the underlying assumptions.

This is the goal of this post: a tentative to draw the most basic blocs of venture capital (VC), the industry investing in startups, and the current debates in the VC world so anyone can be at the same page (especially startups founders).

We’ve designed it in 9 small parts, each one being built on top of the previous one. Do not hesitate to skip the parts which sound familiar.

Ready to enter the VC world? Let’s go.

TL:DR? Check this slideshare for a small summary

Want to know more about startup funding? Read our articles:

Part 1 — Startup Funding: Growth Is The Only Way
Part 2 — The Jedi Trick: You Have to Choose Between Growth And Profits
Part 3 — If Growth Was Easy To Forecast, There Would Be Only One VC fund: Nostradamus Partners
Part 4 — You Need to Lose Money, But Some Loss Are A Really Bad Idea
Part 5 — How To Have Growth AND Profits? (Part1: Transactional models)
Part 6 — How To Have Growth AND Profits? (Part2: Non-Transactional Models)
Part 7 — What About Valuation For Late Stage Startups?
Part 8 — Fail Often, Fail Fast. Investors Do Half of That
Part 9 — What daphni will not invest in
Reminder: daphni investment thesis