The money that is invested by the investor for initiating the project is known as seed money. It is also called start-up capital. This money is usually used for any business-related task like grow the business or for buying any sort of office equipment. You can manufacture and launch the product with the help of this money. Or you can conduct any kind of market campaign.
Where seed money comes from? Seed money can be raised with the debt amount or the equity offerings.
Fundraising rounds
To raise capital for a new business or venture, you need funds. And there are series to raise those funds. These series are known as fundraising rounds. These rounds or series are so helpful for the growth of the business. These fund-raising rounds are so beneficial for the improvement and enhancement when the business expands.
Names of different fundraising rounds
The investors have named these rounds in alphabetical order. Because each Serie follows the next one. These are named Serie-A, Serie-B, Serie-C, Serie-D, and so on. One funding round can take a minimum of 3 months and a maximum of 12 months (1 year).
Pre-Seed funding
This funding is usually done at the start of the business. In most cases, the investor invests his own money in the business. But if the person has no money then he can also ask his family members or friends to invest in this stage. There is a specific amount that is $10,000 to $2 million. This funding is done to develop the product at the initial level.
At this stage, the funding could be risky as it is the investment in an idea. If the idea becomes successful then you can return all your loans or funds. But if the idea flops, you have to bear the loss.
Seed funding
When an entrepreneur's idea begins to work, this is the time to do seed funding. This means that when your idea becomes successful and you decide to do work on it. Then the business needs seed funding to operate its activities. Now the business comes to its operation stage and this money will be used to expand the business. Seed funding can be raised from two sources. One is the venture capital world; the other source is angel investors.
Serie-A funding
After that, when the business proves itself in the previous stages that it is workable. Then it's time to move further. At this stage, Serie-A funding is done. When the company's stock is sold to the company's owner. It is called Serie-A funding. Then the preferred stock of the company can be sold to the company’s investor. This will help the investor trust the company. It's like making a strong relationship between both the company and the stockholder.
When there is any worth of the company, then it can ask for Serie-A funding. That’s why it could be a little bit difficult. This funding helps the company to become a mature company. There are two ways of Serie-A funding. One is an angel investor, and the other one is when one investor invests in the company the other investor also shows a willingness to invest. This process is known as the follow-the-leader effect.
Serie-B funding
After the stage of Serie-A funding, when the complete model of the business is established. Then it is the time to do Serie-B funding. This is not as difficult as Serie-A funding. Most investors like to invest. Because at this stage the image of the company’s situation is clear.
Serie-B funding begins as like as Serie-A funding, which is from valuation or estimation. It is quite clear that if the start-up has acquired Serie-B funding. Then it is the most excellent and successful start-up ever. Because no investor will invest in the business for Serie-B funding without knowing its worth.
Serie-C funding.
Once the business is settled. It is performing all its operations well. And if it needs more money to grow the business. Then this is the time to do Serie-C funding because Serie-C funding is usually done when there is a need to expand the business. The investors of Serie-C funding are the same as Serie-A & Serie-B investors. This investment is not risky. As you have seen that previous funding was raised to start and grow the business. But Serie-C funding is done for the expansion of the business.
Late-stage funding
As the business has started, grown and expanded by the above-mentioned funding. Then it would be highly successful for sure. In the late-stage funding, these rounds are named Serie-D, Serie-E, Serie-F, etc. To acquire late-stage funding, it can be done with the contemplation of IPO. IPO stands for initial public offering.
The main purpose to anticipate the company with IPO is to make it for “go public”. Because if the company goes public, that would be beneficial for the company.
What is M&A?
M&A stands for Merger and Acquisition. This process takes a time limit from 6 months to 1 year. These can be defined as the consolidation of the company. It also deals with the various types of financing transactions like tenders, purchases, mergers, acquisitions, etc. This process is used to remove future competition in the market.
