Learn about the Different Stages of Funding

As an entrepreneur or startup enthusiast, you are no stranger to the term "funding." New-age startups and unicorns are making headlines with their funding rounds. Some are raising seed funding, some Series A, B, and whatnot. Even when I started my journey as an entrepreneur, I didn't know what these stood for and would feel bad. Having spent many years donning the investor hat, I can educate you about funding rounds.

My background

I have bootstrapped my business and have never received a single round of funding. I didn't raise funding because I couldn't; my niche is nothing flashy, you know if you know.

My startup is in the business setup space. It caters to businesses requiring offshore business formation services. So it being a service startup (no product involvement) tends to put off most investors.

But, I've been an investor in many startups so I am in a position to guide you around the various funding rounds.

Funding Rounds

1) Seed Funding / Angel Investment

This is the first round of funding for a startup. People raise seed funding during the starting days. The amount varies from startup to startup. The investment is for taking care of tasks like:

• Legalities
• Market research
• Product Development, etc.

Angel investing can be rewarding but is also one of the riskiest. Reasons?

In the initial days, a startup isn't generating revenue, and the odds of succeeding are less. So the chances of return on investment are slim. This means if you are an angel investor, you are taking a bet where the chances of success are less than 1 percent. You must have read those statistics saying (something along the lines):

50% of startups shut down in the first year. And out of the rest, 50% shut down in the next year. But where can you raise angel investment?

• You can invest your own money.
• You can borrow money from your friends and family.
• Angel investors in exchange for a stake in your startup.

I have been on the other side. I've been an angel investor in many startups, I take these bets because no one took a bet on me during my struggle days. Investing in startups feels like an act of giving back to the startup ecosystem.

2) Series A, B, C, ...

Series A, B, C, etc are the different stages of funding a startup raises for unlocking the next level of growth.

• Series A: This funding helps your startup take baby steps (seed funding) to get to the toddler stage. This funding helps startups improve their operations and product-market fit. The average amount raised ranges between $2 million and $15 million.

• Series B: Once your startup has a proven market fit, it raises Series B funding for expansion. When the startup has to hire more people and improve its technology stack it raises Series B.

The average amount ranges from $15 million to $25 million.

• Series C: Companies doing good and want to expand into different countries and build new products. The average amount you can raise will range between $30 million to over $100 million.

With every round, the investable capital also keeps increasing. These rounds reflect your startup's growth trajectory as well.

Closing Thoughts

When people talk about investing, their list starts and ends with FDs and Mutual Funds. Startup investment is something most will never think about. I hope this post ignites a desire to consider startup investing too.

Best Regard,

Nazir Mehrab

PS: We're offering Belize offshore company formation services and are still bootstrapped