It is not uncommon for a startup business to require several rounds of funding. There are commonly four startup funding rounds. They are called Seed, Series A, Series B, and Series C.
Let’s talk about the different funding rounds and when to start them.
When to start a new round of financing
Generally, the first round of financing is called seed funding. Seed funding usually comes from angel investors, friends, family members, and the original founders. At this stage, companies may look for funding from bank loans, but angel investors are usually preferred. Angel investors will usually purchase a part of the company’s equity at the company’s lowest valuation.
The next stage of funding is Series A funding, and generally, this funding is acquired to help an initial launch. Series A funding is also more significant than Seed funding, and more capital is raised.
Series B funding occurs after the company has been developed through Series A funding and is expanding further. In Series B, a company will have had to prove itself in the market, have a high amount of active users and user activity, but may still be growing.
Finally, Series C funding is for established businesses interested in scaling up and expanding to new markets. Series C funding is only sought after our company is successful and is trying to expand its already existing success.
If you are looking to fund a startup company, you should work in the different rounds of funding to your business plan. While Seed funding is generally exclusive to angel investors, friends, family, and initial business owners, Series A, Series B, and Series C funding can have multiple rounds. These rounds can also include bank financing, so if you’re interested in looking at your options for lending, you can contact Aspen Commercial Lending to speak to and experience lender about your business funding options.