Startup funding is the process of procuring equity from investors to grow a business. While every startup is unique, most will experience a similar funding journey as they scale from concept to commercialization.
Knowing when to seek funding, how much to ask for and how to keep your soul intact along the way are critical decisions that can make or break a new venture. By gaining a deep understanding of the funding landscape, founders can confidently navigate investor meetings and secure the resources needed to scale their startups.
Seed funding is the earliest stage of startup capital, often sourced from angel investors, friends and family. This money is used to build a minimal viable product and validate the business model. It also helps startups establish a valuation and get started with the fundraising process, preparing them for future rounds of investment.
At this stage, it’s important for startups to invest in their team and create a clear growth path that will lead them to profitability. It’s also helpful for them to start establishing basic governance structures like regular investor updates and an advisory board, which will help set professional expectations and prepare them for future rounds of investment where a more formal structure is expected.
With Series B rounds, the stakes are higher and the investors will expect a solid track record with demonstrable progress toward their milestones. It’s common for private equity firms and strategic investors to join at this stage, attracted by a proven business model and growth potential. It’s also a good time to consider debt financing providers who can offer working capital and fund the company without requiring dilution of equity.