By Fernando Berrocal

A startup requires a lot more than simply a great idea. It needs time, discipline, and, most crucially, funding. The startup investment rounds have dramatically changed the corporate environment. Not long ago, there were limited choices for startup funding, but recently there has been a surge in requests for startup capital at various stages. As a fledgling entrepreneur, you must assess where your business stands and how much money you can raise from outside sources. Let's take a closer look at the different stages of financing throughout the startup lifecycle.

Pre-seed Funding Stage: This crucial step of seed funding occurs so early in the process that it isn't even called startup investment. The pre-seed funding stage often refers to the time when a business is getting its operations up and running. During the pre-series stage, it's unlikely that investors would invest in return for ownership of the startup. This step may take a long time or you may be able to obtain pre-series investment quickly.

"Bootstrapping" is the term for the pre-seed investment stage. To put it differently, scaling your startup implies utilizing your existing resources.  Entrepreneurs may need to work overtime or seek a second job throughout the startup's development stage to put the extra money into their new venture.

Seed Funding Stage: It's time to plant the seed after the pre-seeding stage. "Seed money" is the initial step of startup fundraising. Almost a third of businesses fail due to a lack of funding when bootstrapping, making seed capital essential for getting a business off the ground. 

The initial funding is, in theory, the "seed" that permits every business to grow. The company will ultimately develop into a "tree" if you supply it with enough water. Because investors are taking a big risk by investing in a startup, entrepreneurs must provide them ownership in exchange for seed money. The risks are considerably higher because entrepreneurs can't guarantee a successful business plan at this stage.

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Series A Funding Stage:  It's the start of the venture capital funding process. Here the business should have a working product and a continuous flow of money. It's now time for them to seek a series A investment and improve their value propositions. This is a fantastic chance for entrepreneurs to expand their reach into new areas. It's critical to have a plan in place for the Series A investment round that will generate long-term earnings. Many times, entrepreneurs come up with fantastic concepts that may attract a large number of eager consumers, but they are unsure how to monetize them in the long term.

This is the time to start learning about fundraising and developing early relationships with angel investors and venture capitalists. You must discover investors who might be interested in investing in your startup using the "30-10-2 rule". This guideline states that you must find 30 investors ready to invest in your business. Ten of the thirty investors may be interested in your proposition, with two of them transferring cash to you.

Series B Funding Stage: Startups that have progressed through the previous rounds of startup funding have accumulated a sizeable user base and a continuous source of revenue. They've demonstrated to their investors that they can succeed. 

By supporting market reach initiatives, gaining market share, company development, and customer success, investors help businesses extend their horizons. The series B fundraising stage helps businesses to expand so that they can address the diverse needs of their clients while also competing in competitive marketplaces.

Series B funding may appear to be similar to the former in terms of processes and key participants, but it is generally headed by the same characters, including a major anchor investor who assists you in attracting additional investors. The main distinction is the addition of a new crop of VCs that specializes in investing in well-established startups to help them achieve even greater success.

Series C Funding Stage and Beyond: Startups who make it here should be much on their way to being successful. These startups are looking for more investment to help them develop new products and expand into new areas. Investors are happy to finance successful startups at the series C investment stage. They expect to make a profit that exceeds their initial investment. The Series C fundraising stage focuses on accelerating the startup's growth.

In addition, if a startup is unable to reach its growth milestone with series C financing, it will need to seek further capital through series D funding to stay afloat.

Initial Public Offering (IPO): The process of offering corporation shares to the general public for the first time is known as an "Initial Public Offering" (IPO). This procedure is frequently used by growing startups in need of finance, while older organizations utilize it to allow startup owners to sell some or all of their ownership to the general public.

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Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.

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