5 Stages of Startup Funding

Stages Of Startup Funding

Do you have a startup? Then you will know that no matter which stage of startup funding you are in, you need the money for keeping the lights on, employees happy, and the entire momentum running.

As a result, you need to understand each stage of funding accurately. If you don’t, you might not make any progress with investors, losing out on the ones you had on your side. So, let’s find out the five stages of startup funding! Scroll down to find out more on the same.

5 Stages of Startup Funding:

The five different stages of startup funding are as follows,

1. Seed Captial 

Your seed capital is primarily one of the earliest investment sources. For getting your seed capital, you need to depend mostly on personal savings, credit cards, crowdfunding, friends, and family.

Seed Captial

No matter who you get the seed capital from, just make sure you keep your promises – clearly define what are the tangible deliverables. Now, if you have been smart and invested in Cryptocurrency, then you can also use that for your startup funding.

2. Funding by Angel Investors 

You need angel investors, and these investors need a good, lucrative pitch. Angel investors are people with net worth’s of a minimum of 1 million dollars. The second round of funding starts when you know you need more money to expand your teams, marketing, advertising, and the like.

Angel Investors

Since the money that can be expected to raise at this stage is higher than seed capital, and as a result, remember that investors will expect compelling returns.

Read more: Things To Remember While Mentoring Startups.

3. Financing by Venture Capital 

Venture capital comes in the third stage in this process of investment. Here you need the money for expanding the marketing budget, finding new business channels, and investing in customer budgets.

Venture Capital 

Venture capital firms regularly support startups. As long as you make a compelling and lucrative pitch, you can have them by your side.

4. Bridge Loans 

When you reach the fourth stage of startup funding, you have already progressed sufficiently. You must have a commercial product at this stage – even if your startup is not profitable, revenue must be coming in.

Bridge Loans

The funds you get through bridge loans are simply used for venturing into new markets or preparing for an IPO. You could also invest in bitcoin to gearing more funds!

5. Initial Public Offering (IPO)

This is not the end game, but if you have successfully raised money through all four stages, the next stage is automatically going for an IPO. The investors trading for equity will get the space to recoup and make extra profits.

Initial Public Offering

You can always count upon your investments in the absence of similar support. All you need is thorough research on how to buy cryptocurrency in India.

Conclusion: 

When you first started your startup journey, you might have had a lot of passion for raising money and finding investors. But what keeps you going after the first few years is the determination to pursue that dream and commitment to work hard for the same.

Thus, keep the momentum going by simply following the five stages of startup funding accurately!

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About the Author

Devansh Lakhani

Devansh Lakhani, the director of Lakhani Financial Services, clasps a rich experience of 5+ years in the finance industry. A Chartered Accountant by qualification, Devansh has expertly handled funds for HNI clients, been part of an IPO on SME platform to tune Rs. 10+ crores, conducted the right issues to tune Rs. 10+ crores, and accomplished block deals of Rs. 35+ crores in the past. Now, with a zeal to boost startups, Devansh's heart and soul lies in Lakhani Financial Services. To date, LFS has helped 85+ startups with advisory, business plan & pitch deck preparation. Devansh is one of the most respected people when we talk about startup funding, advising, and mentoring. With the support of Devansh, 6 startups raise funds to the tune of 4+ crores. He aspires and is on the mission to boost and scale 1000+ startups in the next 5 years.

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