Funding stages for a bootstrapped startup can be classified into 7.
- Beginner stage:
The beginner stage starts with some saved money or money borrowed from friends or invested money. For instance, the founder continues to work on his main job and at the same time starts a company.
Generally speaking, the pre-seed fundraising stage describes the initial stage of a startup’s activities. The term “bootstrapping” refers to the pre-seed investment phase. Simply said, it refers to utilising one’s own resources to expand the business. Entrepreneurs who are just output their money into the business and work to expand it as much as possible.
The most common pre-seeding investors are:
– Startup Owners
– Friends and Family
– Early-Stage Venture Funds
- Seeding funding stage/ venturing:
We may think of the seed funding stage as the planting of a tree. The “seed” that ideally permits each firm to grow is the original investment. The company will ultimately grow into a “tree” if you give it the right water, which is a solid business plan, combined with the entrepreneur’s commitment. Seed funding enables a firm to cover the costs of product launches, get early traction through marketing, start key recruiting processes, and do further market research for building product-market fit.
- Series A Funding Stage:
At this point, the entrepreneur needs to begin learning about the fundraising process and establish his contacts with angel investors and venture capitalists. Traditionally, angel investors and venture capital companies provide the majority of the Series A investment. They are not looking for companies with “great ideas,” but ones with sound business plans.
- Series B Funding Stage:
The series B investment stage enables businesses to expand in the market in order to satisfy the varied client expectations and compete in markets with high levels of competition. Series B funding is frequently headed by series A investors, including a crucial anchor investor who aids in luring further investors. The main distinction is the emergence of a fresh breed of VCs that focus on funding well-established firms in order for them to continue to outperform expectations.
- Series C Funding stage:
Startups that receive series C investment should already be on their growth trajectory. These firms look for additional investment that might aid in the development of new goods, expansion into untapped areas, and the acquisition of other struggling startups in the same sector.
Investors are happy to support profitable firms throughout the series C investment stage. They expect to make a profit that exceeds their initial investment. The startup’s quick growth is the primary goal of the Series C fundraising round.
- Series D Funding Stage:
If a company is exploring a merger with a rival on fair terms but hasn’t yet gone public, series D funding could be an option. This type of investment provides entrepreneurs with the most practical options and enables them to address problems when they merge with another firm.
- Initial Public Offering (IPO):
This procedure is frequently used by growing startups that require additional capital, whereas in the case of an established business, the owners exit either partly or wholly by offering the shares to the public.
Done By:
Sruthi Saravanan, Law student – University of Birmingham.