Series A, B, C Funding: How It Works - Deepstash
Series A, B, C Funding: How It Works

Series A, B, C Funding: How It Works

Curated from: investopedia.com

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What Is Bootstrapping?

What Is Bootstrapping?

  • Bootstrapping is founding and running a company using only personal finances or operating revenue.
  • This form of financing allows the entrepreneur to maintain more control, but it also can increase financial strain.

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Seed Funding

Seed Funding

  • Seed capital is the money raised to begin developing an idea for a business or a new product.
  • This funding generally covers only the costs of creating a proposal.
  • After securing seed financing, startups may approach venture capitalists to obtain additional financing.
  • Some seed capital may come from angel investors—professional investors who have a high-net-worth.

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Series A Financing

Series A Financing

  • Series A financing follows initial seed capital, generally bringing in investments in the tens of millions of dollars.
  • A start-up will generally draw this level of financing only after it has demonstrated a viable business model with strong growth potential.
  • Series A financing enables a start-up that has potential but lacks needed cash to expand its operations through hiring, purchasing inventory and equipment, and pursuing long-term goals.
  • Series A financiers typically gain a large or controlling interest in the start-up company in exchange for their investment and the risk they are taking.

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Series B Funding

Series B Funding

  • Series B financing is the second round of funding for a company that has met certain milestones and is past the initial startup stage.
  • Series B investors usually pay a higher share price for investing in the company than Series A investors.
  • Series B investors typically prefer convertible preferred stock vs. common stock due to the anti-dilution feature of preferred stock.
  • Series B funding can come from private equity investors, venture capitalists, crowdfunded equity, and credit investments.

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Series C Funding

Series C Funding

  • Businesses that make it to Series C funding sessions are already quite successful.
  • Companies look for additional funding to help them develop new products, expand into new markets, or even acquire other companies
  • Cycle C funding is focused on scaling the company, growing as quickly and as successfully as possible.

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