- Drive growth
- Spur innovation
- Be in an attractive industry
- Be a certain size
- Have strong team of founders
- Have good growth perspectives
- Create employment
- Be sustainable
- Provide a solution for a problem
- Has a social and economic impact
- Be disruptive
- Possesses a clear exit strategy
The different rounds of funding operate in the same basic manner; investors offer cash in return for an equity stake in the business. Between the rounds, investors make slightly different demands on the start-up.
The earliest stage of funding a new company comes so early in the process, usually the founders themselves partakes this. It normally involves the setting up of a new business.
This is the first official equity funding stage. Seed funding helps a company to finance its first steps, including things like market research and product development. For most start-ups, a seed funding round is all that the founders feel is necessary to successfully get their company off the ground.
Series A Funding
Once a business has developed a track record (an established user base, consistent revenue figures, or some other key performance indicator), that company may opt for Series A funding to further optimize its user base and product offerings. Opportunities may be taken to scale the product across different markets. In this round, it is important to have a plan for developing a business model that will generate long-term profit.
Series B Funding
Series B rounds are all about taking businesses to the next level, past the development stage. Investors help start-ups get there by expanding market reach. Companies that have gone through seed and Series A funding rounds have already developed substantial user bases and have proven to investors that they are prepared for success on a larger scale. Series B funding is used to grow the company so that it can meet these levels of demand.
Series C Funding
Businesses that make it to Series C funding sessions are already quite successful. These companies look for additional funding to help them develop new products, expand into new markets, or even to acquire other companies. In Series C rounds, investors inject capital into the meat of successful businesses, in an effort to receive more than double that amount back. Series C funding is focused on scaling the company, growing as quickly and as successfully as possible.