An exciting and gratifying experience, starting a new business can be. But it can also be a difficult one, particularly when it comes to getting the money you need to realize your vision. We’ll talk about the five distinct phases of startup fundraising in this blog.
Seed Funding
The initial investment a firm receives from friends, family, angel investors, or crowdsourcing sites to launch its operations is known as seed funding.
In this stage, funds are often raised to create a business plan, construct a prototype, or carry out market research. The amount of seed money varies according to the startup’s size and industry. It may cost anywhere between a few thousand and several hundred thousand dollars.
Series a Funding
The first institutional round of funding that a business receives is called series A funding. Typically, venture capital firms or angel investors who are interested in the startup’s growth potential oversee this stage of funding.
The money raised now is used to create a team, advance marketing strategies, and further develop the good or service. Series A capital might be anything between $2 million and $15 million.
Series B Funding
The second round of institutional funding given to a business is known as series B funding. The startup has already shown some degree of success at this point, and it wants to expand its business.
The money raised at this point is utilized to increase production, expand into new markets, and enhance the goods or service. Series B funding can be in the $10 million to $50 million range.
Series C Funding
Series C funding is the third round of institutional funding a startup receives. At this stage, the startup is looking to become a dominant player in its industry and expand its market share.
The funds raised in this stage are used to acquire other companies, expand internationally, and improve technology infrastructure. The amount of Series C funding can range from $50 million to $300 million.
IPO or Acquisition
Going public through an Initial Public Offering (IPO) or being bought by a larger company are the two options for a startup’s final funding stage. By going public, a startup can raise money by offering shares of the business to the public.
Being acquired refers to the startup being purchased by a more established business, usually for a considerable sum of money. The startup may continue to grow and expand its operations thanks to the substantial financing provided by both choices.
