For anyone that's watched a TV show like Silicon Valley as a more recent example, you'll have likely heard phrases like 'Stage A,' 'Stage B,' 'Seed Capital,' or simply 'Runway' being used by some of the characters. To be as straight forward as possible, these refer to various levels of funding made available to companies of various sizes. So, what exactly is it that makes these various types and stages of funding for Business Startups so different?
And when exactly do they become more or less relevant to your business? We'll be taking a look at just when certain kinds of funding can come into view for your business and the differences between them.
Angel Investment is a small amount of investment capital that is used in order to get a very early-stage company off the ground. While these Angel Investors are usually specifically interested entrepreneurs, investment funds, friends and family.
This amount of funding generally refers to a relatively small amount of initial investment capital which can be up to $150,000. Pre-seed capital is a kind of funding that is before any kind of institutional interest or investment.
While Pre-Seed funding generally consists of a small amount, seed funding is the first wave of institutional investing that a company will obtain. Depending on the company and investment firm getting involved, Seed Funding generally consists of investment from $10,000 to $2 million.
Typically speaking, Seed funding comes after Angel and pre-seed investing.
This involves funding provided to a startup from an investor, entrepreneur, government, etc. These are provided without the need for a return on investment.
Venture funding refers to a series of investment rounds taken up by venture capital firm, these include investment series ranging from A, B and beyond. With any investment from venture capital firms, these series come with pre-conditions in order to unlock additional stages of investment.
Series A-B consists of funding rounds specifically aimed at smaller and sometimes more established companies and typically range on investment of $1-30 million.
Meanwhile, Series C and later stages are actually targetting later stage companies and consists of investment rounds of $10 million or more.
This is more of a broad name given to the kind of funding that a company undergoes when the stage or kind are otherwise unable to be effectively described.
This refers to a kind of fundraising round that is taken up by a corporation as opposed to a venture capital firm. While VC's tend to focus on supporting and creating a prodigious Return on Investment.
These refer to dedicated digital platforms that allow users to participate in a crowdfunding campaign that a company takes on as opposed to seeking out Venture capital or other kinds of investment.