Different Stages of Seed Funding that Entrepreneurs Should Know About

In tough times, the fund is an only element that helps to reinforce the startup company.
  • BY Jaspreet Kaur

    Feature Writer, BusinessEx

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  • May 29,2019
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  • 11 Mins Read

In a startup’s trajectory, challenges and obstacles emerge from the beginning onwards. These challenges continue to be on the way until the end, majorly affecting the company in the initial five to six years. In tough times, the fund is an only element that helps to reinforce the startup company.

Considering the need for funds from time-to-time, the startup companies lead seed funding rounds. Originally, seed funding round is a platform wherein the company persuades investors, equity investors, incubators and other business companies to invest monies in the startup. It does not matter whether the startup companies organize Series A or Series D seed funding at all stages of the seed funding rounds play the same role that is, raise money from the investment companies.

Types of Series Funding in Seed Funding Round

Before organising a seed funding round, it is important to know how many stages of series funding are within Seed Funding.

Primarily, there are four to five series funding in the startup ecosystem that is, Series A, Series B, Series C, Series D and Series E. In all these series funding, a company raises investments and alongside that, enhances the valuation of the company.

Series A Funding Round

Once a company enters the market and becomes recognised then it needs to expand itself. For expansion, the company can start a Series A funding round. Under Series A round, a startup demonstrates its brand’s growth in the short span and further, share its future plans so as to have rapid growth.

The amount of money received in the series A round ranges between $2 million to $15 million. Usually, a single investor leads Series A funding round and if there are other investors besides him, then they follow the first investor. So, if the first investor denies endowing money to the company then consequently, other investors would also refrain from investing in the business.

Series B Funding Round

When a startup is able to survive in the market and gradually, realizes that its product is the right fit for consumers. Then, the company looks for further expansion and envisions to convert its company into a big empire.

In such a scenario, the company raises Series B funding round. A major reason for raising Series B funding round is that a company looks for expansion in terms of employee headcount. For that, it needs to bring more professionals on board.

In this funding round, the investment amount ranges from $7 million to $10 million, depending on the company’s size and growth rate. The investors, who take part in the Series B funding round, are venture capitalists and previous investors.

Series C Funding Round

The companies, who raise Series C funding round, generally aim to enter in new segments as well as international markets. So, the companies which organise Series C funding round do financially well and thus, seek better options in the business ecosystem.

The amount of money, which is raised in this round, is roughly $26 million. Moreover, the valuation of the company increases and thus ranges between $100 million to $120 million.

Series D Funding Round

This funding round is little intricate than other funding rounds and thus, is not opted by all companies. The companies, which choose Series D funding round, plan to boost themselves before going public.     So, the funding round helps to shore up the companies in uncertainties.

Besides this, there is a downside to this funding round. Actually, the company cannot raise the money up to or beyond its actual valuation. Venture capital firms are the only investors who take part in the funding round.

Series E Funding Round  

 The companies, who raise Series E funding round, are usually the ones which face similar problems in Series D funding round. Inability to meet business expectations, conducting the business privately, and requiring an upward push before going public are some of the common reasons to carry Series E funding round.

 

            

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