The Stages of Startup Funding, Explained

stages of startup funding

Are you a budding entrepreneur looking to make your mark on the world? Is creating a startup the only thing on your mind? Well, even though you may have the best idea ever, there are a few things to consider first. About 90 percent of startups fail at some point, and this isn’t necessarily because they’re based around a bad concept. Much of the time, many owners don’t know how to market and fund their business. If you’re wondering how to scale your startup but don’t know how to get funding, then don’t look away. This article will tell you the most important stages of startup funding. 

Pre-Seed Funding 

Pre-seed funding is the earliest stage in financing a startup and is also one of the most confusing. 

This method of financing comes before any investors have honed in on your startup. Most of the money that goes into a company in the pre-seed funding phase is from the owner’s personal finances, or pre-seed investors. 

Seed Funding 

This is the second phase of financing a startup and is typically the make or break point following a pre seed accelerator program. 

This phase can be risky for investors because of your startup’s new status, but this doesn’t mean they aren’t putting money out. Over 4 billion dollars went into startups during the seed stage in the first quarter of 2021 alone. 

Series A Funding

This is the stage where your startup has become secure in its services and planning. 

At this point, you’ll be certain of the profit that your product can draw, and the majority of your time will be devoted to the promotion and branching out of your services.

It also isn’t uncommon for a seed accelerator to be utilized in this phase to gain traction. In this case, a series a accelerator would be the greatest help. 

Series B Funding

This phase resembles the Series A startup funding stage, but with a few more perks. Namely, new resources to gain the attention of potential investors. 

Should you reach this stage, most of your attention will be focused on expanding your startup into a well-established and reputable business. 

Series C Funding

Series C Funding will mark your business as truly successful. At this point, your profit margin will have increased greatly, and you’ll have customers that are attached to your product.

Expanding your startup will be a priority, and reaching new markets will allow you to take your business even closer to the top.  

Don’t Ignore the Key Stages of Startup Funding 

Becoming the founder of your own startup can be an exciting and rewarding experience. At the same time, you must understand the financial implications that come with one. 

Knowing the various stages of startup funding can save you a great deal of time and money going forward. Additionally, it’s a step towards preparing yourself for the responsibilities of becoming a business owner. 

We at Newchip are always looking to help you on your entrepreneurial journey. If you’re searching for an online accelerator program to fund your startup, make sure to check out our startup application process! 

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