An startup It goes far beyond what an innovative idea. This requires a lot of time, discipline, dedication and above all, financing. Although there are several financing rounds to startupsMany businesses generally fail due to such inaccessibility.
The scenario financing a startups He changed significantly in recent years. There was an increase in risk capital available for these in various phases of their lifecycle.
The type and value of the financing available at each stage is typically based on various elements. Such as the country in question, entrepreneurial history, the market potential and the associated risk.
Pre-seed funding stage
Also known as bootstrapping, this phase occurs so early that is not officially considered as one of the financing rounds to startups. Referring to the operations of the boot process startupAt this stage it is necessary that there is a prototype or model of the product, one well structured business plan as well as proof of the potential of this business, such as the first customers interested. These actions will prevent the fall in business called "Valley of Death", where the concepts with potential fail due to lack of financing.
Is applicant seeking guidance from more experienced entrepreneurs. Thus, you get tips and advice on how to turn the idea into an operational and profitable. Hardly an investor will be interested in a startup that does not have the legal affairs in order. Therefore, the entrepreneur must deal with Brand Protection, Copyright, and other bureaucratic issues.
Potential investors at this stage are the owner of the startupThe group called FFF (Friends, Family & Fools), business angels, crowdfunding, and called micro VCs (Venture Capital), which are investors who usually invest in startups who have yet to gain traction to reach the next stages of financing.
An startup who is ready to receive investment in this phase is estimated between 10 and 100 thousand US dollars, and the investment provided are around 50,000 US dollars.
Seed funding stage
At this stage, the product is ready to be developed. Likewise, the financing here raised will make the necessary adjustments this in order to meet the real needs of the market and customers. This includes developing a deeper and better traction in the market and creation of the work team and due hires.
Once startup are considered high risk investments due to their associated success of uncertainty, investors provide the funding in exchange for company shares whose percentage usually ranges between 10-50%.
Potential investors this stage are, once again, the owner himself, the group called FFF (Friends, Family & Fools), designated by micro VCs (Venture Capital), business angels, venture capital companies and crowdfunding.
in this round of funding to startupThe investments are between 3 and 6 million dollars and that investments range from 500 billion to three million dollars.
Series A funding stage
At this stage, startup It has developed the product as well as a customer base and a steady stream of revenue. With the investments made at this stage will occur a business optimization and growth. In other words, the product is refined, the work team will grow, established partnerships, open new market opportunities, offset existing economic deficits, among others. In short, startup It will be prepared for future growth and success.
Potential investors are accelerating this phase, business angels and venture investment companies. These are not looking for good ideas but startups that have a solid business strategy, able to take benefits from the investment provided.
Startups with a good business plan, Estimated between 10 to 30 million dollars can investments ranging from 2 to 15 million dollars during this phase, and in exchange is required between 15 to 30% of the company.
Series B funding stage
in this round of funding for startupsThe company already has a substantial customer base as well as a steady stream of revenue. In addition, already proven their ability to achieve success on a large scale.
Usually the investment obtained at this stage is driven by the same investors in Serie A. Here, the function of these passes for attracting the designated late stage VCs, investors specialize in helping startups which are well established. These investments will be used in the internal expansion of the company, hiring more professionals to the team, and external growing globally, increasing market presence and dealing with competition.
Startups evaluated between 30 and 60 million are able to raise investments of approximately $ 30 million.
Series C funding stage
At this stage, startups They are on the right growth path. Here, seeking more investment funds in order to promote international expansion, as well as reach new markets, develop new products and to acquire new business.
As this stage, the risk associated with startups is greatly reduced, more investors will show interest ensuring its role of leading investors. Potential investors are banks, late stage VCs, private equity firms and hedge funds.
Although there are more investment phasesUsually this is the last round of preparing companies for IPO or even acquisition. Startups with a good growth business are evaluated between 100 and 120 million dollars of which can investments whose value is approximately $ 50 million.
Series D funding stage
Not all startups need to enter this investment phase. This is only for particular situations, such as finding new opportunities for expansion before passing the public desire to remain private for a period of time longer than usual. Or else by the fact that the targets set in the C round have not been met, the latter being called "round down".
Potential investors at this stage are the same as the previous phase, including banks, private equity firms, late stage VCs and hedge funds.
As startups They must be evaluated at this point between 150 to 300 million dollar investment being the typical walk around 100 million.
IPO (Initial Public Offering)
IPO represents the last phase of financing rounds to startups. This is the process of providing corporate actions to the general public for the first time, that is, is the private company of transition to a public company.
Acquiring funds is not the only advantage that this transition presents. A public organization is able to generate more resources through secondary offerings, access to public markets and sell shares more easily. In addition, the company's mergers with other startups it becomes easier since they can use their public actions for this action.
For many entrepreneurs this is the way to be rewarded for their hard work throughout this trip. So can sell part or all of the shares, being common the search for new business opportunities, retire-or even become business angels helping others startups with their wisdom and investments.
At this point, startups It is valued at $ 100 million in revenue and only the typical investments ranging between 50 and 500 million dollars, or even more, which are received from the general public.