The Issue Sustainability Startup Financing During the Life Cycle

Abstract

Around the world, lack of funds and poor choice of investors are causing the death of the vast majority of startups right from the very beginning of their existence. Research on problems and prospects for start-ups in Ukraine focuses primarily on the search and improvement of macroeconomic tools and methods, while foreign resources offer specific practical recommendations that are chaotic, aimed at solving "point" problems, and do not contain a generalized methodological framework. The article clarifies the meaningful characteristics of startups - time constraints (10 years), stages of business cycles (pre-seed, seed, startup, growth, expansion, maturity, and possible exit), and fundraising. An analysis of the structure of sources of funding for start-ups in the European Union has shown that most founders rely on their own resources and the help of friends and relatives; the least involved fundraising tools are loans, IPOs, and ISOs. On the other hand, business angels and venture capital are active mainly in the "adult" stages of startup development. These findings enabled the authors to systematize the fundraising sources according to the stages of the startup development and to identify the vulnerable elements that threaten the sustainability of the fundraising startups, which is defined as the ability to implement the program or project and maintain the positive results in the long run. An analysis of approaches to assessing the level of sustainability of funding has led to the conclusion that in order to fundraise effectively for startups, it is important not only to diversify sources of funding but to select the right types of resources that will meet the project's mission and founders' expectations. In view of this, the authors propose to divide all types of fundraising sources into three categories: internal, supportive or neutral, and external. Such a division, supported by the motivational characteristics of the startup for its founder, allows authors to take into account the individual constraints and capabilities of each source and maximize the benefit and sustainability of funding. The work identifies the most vulnerable interstage transition in the startup lifecycle and proposes to use an additional source of fundraising, to support the local community, to ensure financial sustainability. Keywords: startup, startup lifecycle, fundraising, sustainability of fundraising, public funding.