The Understandable Guide to Startup Funding Stages: Series A, Series B, Series C

Introduction 

Starting a business is difficult. As the founder of a startup, you are concentrated on creating your product, selecting top staff, and securing funding for your company. Your startup can be financed in a few different ways. Most companies expand their businesses through personal or family and friend funds, client revenue, debt funding, or venture capital.

A startup with an excellent concept or business plan wants to set up its operations. due to the generosity of friends, family, and the founders' own financial resources, the company has grown slowly from its modest beginnings while demonstrating the value of its model and goods. With time, the company's clientele expands, and its operations and goals grow as well. The company has quickly risen through the ranks of its rivals to achieve a high valuation, creating opportunities for further growth that could involve adding new facilities, personnel, and possibly an IPO (IPO).

Seed, Series A, Series B, Series C, and so on are a few of the several funding tiers for startups. Startups should be aware of the fundraising rounds they will go through, which are often dependent on the maturity and development of the business at the time.

In this article, we will briefly talk about funding rounds for startups and guide to understanding funding stages such as series A, series B, and series C.

Table of contents: 

1. What are the funding rounds for startups?
2. What is series A funding?
3. What is series B funding?
4. What is series C funding?
5. Conclusion

1. What are the funding rounds for startups?

Depending on the sector and the level of investor interest, businesses may be eligible for types of funding rounds. Startups frequently receive "seed" capital or angel investor money at the beginning of their operations.

Following these funding rounds, Series A, B, and C funding rounds as well as other efforts to raise money may be made, as necessary. A business that determines to bootstrap, or simply survive off of the kindness of friends, family, and the depth of their own pockets, will not do, needs Series A, B, and C funding.

Series A, Series B, and Series C funding may be acquired in more than one round. Instead of being acquired one after the other, they are referred to as A, B, and C depending on the stage of development the firm is in when the funding is obtained. If a startup is successful, it may anticipate going through each step of funding, from early seed capital through Series C funding. For the aim of growth, the majority of businesses will frequently obtain new finance.

1. What is series A funding? 

Series A funding is the initial phase following the seed stage. Having a strategy for creating a business model that will yield long-term profit is crucial in this phase. Seed firms frequently have fantastic concepts that attract a sizable number of devoted users, but the company is unsure of how it will monetize the business.

Series A rounds typically raise between $2 million to $15 million, however, due to high tech industry valuations or unicorns, this amount has generally increased. The typical Series A funding amount in 2021 was $10 million.

Investors aren't simply searching for exceptional ideas in Series A investment. Instead, they are seeking businesses with innovative ideas and a solid plan for converting those ideas into lucrative ventures.

1. What is series B funding?

Series B rounds are all about moving businesses beyond the development stage and into the next phase. Startups are assisted by investors by their increased market reach. Companies that have undergone Series A and Seed fundraising rounds have established sizable user bases and shown investors that they are ready for success on a broader scale. The company will need Series B capital to expand in order to handle this level of demand.

The development of a team and the creation of a great product involve top-notch talent acquisition. A company spends a few pennies to grow its customer base, sales, advertising, technology, support, and staff.

Companies undergoing a Series B investment round are typically well-established, and this is reflected in their valuations, which typically range from $30 million to $60 million.

1. What is series C funding?

Companies that secure Series C capital are already quite successful. These companies look for additional money in order to assist them to develop new products, grow into new areas, or even buying other companies. In Series C rounds, investors put money into the core of profitable companies in an effort to get back more than twice as much. Scaling the business and achieving the best possible growth are the main goals of the Series C fundraising.

Buying another firm might be one strategy for a corporation to grow. Consider a fictitious business that aims to produce meat-free alternatives. If this business receives a Series C capital round, it will have probably already achieved levels of product sales in the US that are unheard of. Targets have likely already been met by the company from coast to coast. Investors have a reasonable expectation that the company will succeed in Europe since they have faith in the market analysis and business plans.

Many of these businesses use Series C capital to increase values before going public. Companies currently enjoy higher valuations. Companies seeking Series C capital must have well-established, reliable revenue streams, solid client bases, and histories of expansion. Companies go for a series D round or IPO after a series C round of funding.

1. Conclusion 

In conclusion, in this article on startup funding guide, one should gain an understanding of the differences between these capital-raising rounds can aid in your ability to interpret startup news and assess the potential of entrepreneurial ventures. A typical startup goes through a series of development and growth stages, and according to their growth stages funding rounds are raised as we rightly saw in this article.

References:

[1] https://www.investopedia.com/articles/personal-finance/102015/series-b-c-funding-what-it-all-means-and-how-it-works.asp#toc-how-funding-rounds-work

[2] https://visible.vc/blog/startup-funding-stages/#Series%20A%20Funding