The first $1 million raised is critical to cement a Start up financing foundation and the basis on which future funding rounds will be built.
Even as RedBus was being sold to Ibibo for Rs 600 crore in July 2013, visitors could see batteries for an inverter lying beside a shabby staircase that led to a very basic office. “We had learnt to conserve cash early, learning from the crisis of Lehman Brothers. At the time of exit we still had a lot of unused cash in the company’s account,” Phanindra Sama, founder of India’s largest bus-ticketing platform, told ET after the sale.
The RedBus team had decided to work out of a basic office, take small salaries and conserve all cash in building a business that make for the largest exit in India’s startup history.
“A lot of Start up financing when they receive large funding, start spending on unproductive areas such as office upgrades, unnecessary technology tools… These should be avoided,” said Sanjay Parthasarathy, CEO of data analytics firm Indix that recently raised $15 million.
Parthasarathy said he did all he could to avoid having a workspace in the initial days. “I worked out of home, then at Starbucks and sometimes even Barnes and Noble,” he said.
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Source : http://retail.economictimes.indiatimes.com/news/industry/how-to-spend-first-million-in-your-startups/48353877