Fundraising rounds for a startup typically follow a sequence, each catering to different stages of the company's development. Here are the primary fundraising rounds:
Plan out the expected initial investment requirements and potential profits of your business with these financial model templates.
Pre-Seed Round:
- Purpose: To develop the initial concept, prototype, or MVP (Minimum Viable Product).
- Investors: Founders, friends, family, angel investors, sometimes early-stage venture capital firms.
- Amount Raised: Varies widely, typically between $10,000 to $250,000.
Seed Round:
- Purpose: To complete the MVP, conduct initial market research, and gain early traction.
- Investors: Angel investors, seed-stage venture capital firms, crowdfunding.
- Amount Raised: Generally between $100,000 to $2 million.
Series A:
- Purpose: To scale the product, expand the team, and start generating significant revenue.
- Investors: Venture capital firms, sometimes strategic investors.
- Amount Raised: Typically between $2 million to $15 million.
Series B:
- Purpose: To expand market reach, develop the product further, and optimize processes.
- Investors: Larger venture capital firms, late-stage venture capital firms.
- Amount Raised: Generally between $7 million to $30 million.
Series C and Beyond (Series D, E, etc.):
- Purpose: To enter new markets, make acquisitions, or prepare for an IPO.
- Investors: Venture capital firms, private equity firms, hedge funds, and sometimes strategic investors.
- Amount Raised: Can range from $30 million to hundreds of millions.
Mezzanine Financing / Bridge Round:
- Purpose: To bridge the gap to an IPO or major acquisition.
- Investors: Private equity firms, hedge funds, venture capital firms.
- Amount Raised: Varies widely.
Initial Public Offering (IPO):
- Purpose: To go public and raise capital from public markets.
- Investors: Public investors.
- Amount Raised: Depends on the company's valuation and market conditions.
Post-IPO / Secondary Offering:
- Purpose: To raise additional funds after going public.
- Investors: Public investors.
- Amount Raised: Depends on market conditions and the company’s needs.
Each round is designed to meet the specific needs of the startup at its particular stage of growth, from concept development to scaling and beyond.
Article found in Startups.