Last Updated on March 11, 2021 by Arina
Startup Series Funding: What You Need To Know
Getting funds for a startup is a daunting task! From creating fundraising ideas to scaling, a startup owner has to do so many things to raise capital from the investors. Furthermore, as the startup begins to expand, capital funding becomes a must. This is where startup series funding comes in!
Startup funding means different funding stages that help a startup to grow. It plays a crucial role in the success of a startup company. Here is everything you need to know about startup series funding-
How Can Startups Raise Series Funding
With different stages of series funding, an entrepreneur needs to know different ways to raise series funding. Here is how can a startup raise series funding-
Series A Funding
Before investing in Series A funding, most venture capital firms look for entrepreneurs with great ideas to turn the startup into a well-established business. Thus, if a startup owner is already earning revenue, has a clear vision of how to use the funds, and has a unique idea, he can approach the venture capital firms for funds.
But, everyone knows that investing in a startup is risky. So, a startup owner should look for a reputed investor who will also act as an anchor investor to encourage other investors to trust the startup and invest.
Series B Funding
Series B funding requires the business owner to present a profit report to convince investors. This stage of funding aims to boost the profit and widen the market reach. As the startup has started making a profit, investors may also consider the returns before investment. So, investors who usually make later-stage investments may also be interested in Series B funding.
Series C Funding
At this stage, the startup is already earning higher profits and is looking for a merger with big companies or buying startups with an aim to expand. This entails that Series C funding isn’t a difficult task. As there are big signs of returns, the private equity firms, investment banks, and bigger groups also show their interest to join as investors.
How To Talk To Investors For Startup Series Funding
Approaching the renowned investors for startup funding mandates the businesses to increase the value before they reach a level to convince the investors. For Series A funding, a startup needs to show the unique vision and the profit figures it has managed to earn so far.
For Series B funding, businesses need to be ready to expand the customer base to the other markets. Furthermore, for Series C funding, the startup must have grown such that it can upscale to the level of merger or IPO offerings.
Whatever the stage of a startup is, the entrepreneur should try to convince the investors at their best. Also, the business owner should have good communication skills, business pitch, and should be capable of illustrating the business model. Keep all the documents and paperwork ready.
The startup funding stages allow startup owners to boost their business. It also allows them to see where their startup stands or which investors would be interested in helping their business grow.
However, in order to get funds, a startup company must be mature enough to qualify for funding. You can calculate the net worth of the startup and identify where a startup stands.