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Startup Funding Lifecycle

Startup Funding Lifecycle

Different stages of Startup Funding 1. Pre-seed Funding stage This is the first step in the funding process and is also commonly known as the bootstrapping stage. This stage mainly involves the startup owners using their own money or maybe borrowing from their friends and family members. 2. Seed Funding phase After the pre-sowing phase, it is an ideal opportunity to actually plant the seed. The first of the stages of startup grants is "Seed Funding". Almost 29% of new companies run out of capital while starting the bootstrap, which makes the basic starting capital for starting and operating a business. 3. Seed-capital Seed-capital is an investment made at the preliminary stage of the startup. This helps the business in identifying and creating a perfect direction for their startup. Funds raised at this stage are used for knowing the customers’ demands, preferences, and tastes, and then formulating a product or service accordingly. Most of the budding entrepreneurs raise this capital from friends, mentors, and family, while some take up loans in exchange for common stock. 4. Venture When the company’s final products or services reach the market, venture capital funding comes into the picture. Regardless of the products’ profitability, every business considers using this stage that further involves multiple rounds of funding: • Series A: Series A investment, being the very first round of funding, doesn’t ask for external funding. At this stage, startups have formulated a specific plan for their product or service. It is mostly used for marketing and improving your brand credibility, tapping new markets and helping the business grow. • Series B: When a business relies on Series B investment, it portrays that the product is marketed right, and the customers are actually buying the product or service, as decided earlier. Such funding helps a business in paying salaries, hiring more staff, improving the infrastructure and establishing it as a global player. • Series C: A startup can receive as many rounds of investment as possible, there is no certain restriction on it. However, during Series C investment, the owners, as well as the investors, are pretty cautious about funding this round. The more the investment rounds, the more release of the business’ equity. 5.IPO (Initial Public Offering) When a startup decides to raise funds from the public including institutional investors as well as individuals, by selling its shares, it is known as an IPO (Initial Public Offering). IPO is commonly related to ‘going public’ as the general public now wants to invest in your company by buying shares.


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