In this module, you will learn some basic investment capital strategies for new ventures, as explained through a capitalization table. The capitalization table summarizes the percentage of ownership and its value over time. While most ventures grow organically from revenues or bootstrapping, investor capital can accelerate that growth. Scaling and accelerating a business makes sense if the profit margins improve with scale. >> When considering asking for investment capital in exchange for equity, it is important to keep in mind that investors are interested in reselling their equity for multiple times their investments. There are also different types of investors, and each have their own way of deciding how to invest. Early stage investors typically invest 10 to $ 500,000 of their personal money, for a relatively small percentage of equity. They also typically invest in you as a person, knowing that most other aspects of your business are high risk and can change on short notice. >> Early stage investors also include accelerators, which simultaneously invest in a cohort of startups offering the same cash equity deal, shared office space, structured workshops and mentorships to the startups. Later stage investors, or venture capitalists, or VCs, typically invest upwards of $5 million in exchange for a moderate percentage of equity. They usually want to see an advanced prototype, evidence of a product market fit, traction or other signs that there are moderate levels of risk. >> Capitalization tables summarizes who owns how much equity and the respective value of that equity, and are useful in strategizing how and when to raise capital. These tables can also be visualized as pie charts. To illustrate two strategies, let's start by imagining the same company with an initial evaluation of $950,000, all 100% by the entrepreneur. In both strategies, the entrepreneur raises a total of 5.5 million. >> In the first strategy, the entrepreneur is able to attract a single round of venture capital investment worth $5.5 million. In exchange, the VC owns 85% of the equity. In the second strategy, the entrepreneur first completes an accelerator program which invests $50,000 for 5% equity. Then upon completing the accelerator, the entrepreneur raises $500,000 in seed funding for 20% equity. For their third round, they go for the venture capital investment and raise $5 million for 29% equity. >> In the first scenario, there is only one large round of funding, which enables the entrepreneur to focus on business development and take a break from chasing investors. However, this approach would require a fairly convincing pitch with little traction and the entrepreneur becomes a minority shareholder. The entrepreneur might also be committed to pursuing an IPO (initial public offering) in order for the VC to actually make their returns. >> In the second scenario the entrepreneur spends more time and effort raising capital in multiple rounds. However, they retain a much larger percentage of equity. This is because they can reach the intermediate milestones and create value in between those rounds. >> Now that we have identified some basic financing strategies, your key activity for this module is to interact with a potential investor to validate its attractiveness to them as a potential investment opportunity.