The Short Guide for Startup Funding Round
By Rotem Gal
Pre-Seed funding is also known as pre-seed money or pre-seed capital. It is the initial investment the business needs to get started. However, this is not included by many people in the cycle of funding. The funds can come from family, friends or investors. Sometimes the persons who invest in the company get a stake in the exchange. Crowdfunding is one of the pre-seed funding platforms out the various pre-seeding platforms.
During the pre-seed funding, founders along with small team working on the proof-of-concept or prototype. The founders themselves invests in the company or by their friends, family and sometimes incubator or any angel investor.
Seed Funding is the initial money a company raises even they raise Series A or not in the future. However, few companies also raise pre-seed funding to reach a position to raise a seed round, but this is not done by every company. Seed funding is expected to support the growth of the company, it can help the start-up to reach its first step i.e. Market research or Product development from its idea stage.
Seed funding can be raised from friends, family and sometimes incubator or any angel investor. And for early-stage start-ups Angel Investors are most common however, Venture Capital firms are a very good option.
For many start-ups, seed funding is the endpoint as the company closes if money runs out without getting traction. And some start-ups close its funding as they are not interested in raising money for future growth.
Money Involved in Seed Funding?
Usually, Seed funding round is between $500,000 and $2 million. It may be more or less depending on the company’s requirements.
What is Series A funding round?
Series A round is next round of funding after the seed funding once the company has some traction on their key performance indicators e.g. Revenue, number of users, number of views, etc depending on their industries KPIs. This round helps them to uplift their current KPIs performance. In Series A round funding, the companies have to develop a business model as per their future plans. In the funds from Series A round is expected to be utilized in revenue growth.
Involved of Money in a Series A funding round?
This round comes after the seed round, so the investment is higher than a seed round i.e. usually $2 million to $15 million. The funding is not for the great idea but for implementing the ideas for future growth. Series A round and all subsequent rounds are led by lead investors along with other investors. As the first investor, it is most important so other investors need to be in line. As losing the first investor before this round can be devasting as others may also drop out. Usually, Venture Capital firms are involved in Series A funding sometimes Angel investors also get involved.
What is Series B funding round?
In case a start-up reaches that point where they are ready to raise Series B round of funding and have already initiated their product in the market fit and needs …read more
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