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    Simarleen Kaur 0223

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    simar leen
    There are several types of capital that startups can raise to fund their business. Traditional series funding includes pre-seed, seed, Series A, Series B, Series C, and sometimes Series D+ funding. Pre-seed funding comes from friends and family and is used to launch the startup. Seed funding of around $1 million is used for product development and comes from friends, family, and sometimes VCs. Series A funding is used after gaining users and market fit to expand the product or market. Series B funding helps scaling for growth. Series C funding supports expansion through acquisitions or new products. Beyond Series C, additional funding rounds are rare and usually indicate underperformance or an alternative to going public. Common sources

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    Simarleen Kaur 0223

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    simar leen
    29 views3 pages
    There are several types of capital that startups can raise to fund their business. Traditional series funding includes pre-seed, seed, Series A, Series B, Series C, and sometimes Series D+ funding. Pre-seed funding comes from friends and family and is used to launch the startup. Seed funding of around $1 million is used for product development and comes from friends, family, and sometimes VCs. Series A funding is used after gaining users and market fit to expand the product or market. Series B funding helps scaling for growth. Series C funding supports expansion through acquisitions or new products. Beyond Series C, additional funding rounds are rare and usually indicate underperformance or an alternative to going public. Common sources

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    There are several types of capital that startups can raise to fund their business. Traditional series funding includes pre-seed, seed, Series A, Series B, Series C, and sometimes Series D+ funding. Pre-seed funding comes from friends and family and is used to launch the startup. Seed funding of around $1 million is used for product development and comes from friends, family, and sometimes VCs. Series A funding is used after gaining users and market fit to expand the product or market. Series B funding helps scaling for growth. Series C funding supports expansion through acquisitions or new products. Beyond Series C, additional funding rounds are rare and usually indicate underperformance or an alternative to going public. Common sources

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    29 views3 pages

    Simarleen Kaur 0223

    Uploaded by

    simar leen
    There are several types of capital that startups can raise to fund their business. Traditional series funding includes pre-seed, seed, Series A, Series B, Series C, and sometimes Series D+ funding. Pre-seed funding comes from friends and family and is used to launch the startup. Seed funding of around $1 million is used for product development and comes from friends, family, and sometimes VCs. Series A funding is used after gaining users and market fit to expand the product or market. Series B funding helps scaling for growth. Series C funding supports expansion through acquisitions or new products. Beyond Series C, additional funding rounds are rare and usually indicate underperformance or an alternative to going public. Common sources

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 3

    Kaur 1

    Simar Kaur

    28 February 2023

    Explain the different types of capital that startups raise.

    There are many different ways that startups  receive funding to launch and scale their
    business. As good as a product or service may be, startup founders know they need
    financial support to scale their ideas. Many startups look to traditional types of startup
    capital, known as series funding. Series startups usually progress through these
    stages:

    Series Funding
     Pre-seed funding
     Seed funding
     Series A funding
     Series B funding
     Series C funding
     Series D+ funding
    There are also non-series funding sources. These usually supplement series startup financing. 

    Pre-seed Funding
    Pre-seed startup capital is the first round of funding for many startups. During this
    stage, founders are usually still spearheading most efforts at the startup. Founders in
    the pre-seed stage often rely on “bootstrapping,” or gathering funds from friends and
    family rather than more traditional funding sources. Pre-seed funding covers the ex-
    penses for launching the seed startup.

    Seed Funding
    Seed startup capital helps fund market research and product development. During
    this stage, investors are mostly friends, family, and sometimes venture capitalists.
    Seed startups raise a median of $1 million. The amount of funds a startup needs dur-
    ing this stage varies depending on the industry, product, or service.

    Series A
    Founders look into Series A startup financing after their product gains a reliable user
    base and product-market fit. Typically, Series A startup capital supports expanding
    the startup’s product or target market. With Series A, founders focus on using these
    funds to maximize the ROI for themselves and their investors.

    Series B Funding
    Kaur 2

    Startups in the Series B phase have a reliable user base and are usually performing
    well. Series B funds help startups expand to meet rapidly growing consumer de-
    mand. In this phase a startup is less risky, but it’s still important to focus on scaling
    sustainably.

    These funds usually cover:

     Hiring industry leaders

     Expanding advertising efforts

     Growing the sales team

     Innovating proprietary technology 

    Most startups in Series B will turn to venture capitalists because they need a large
    amount of startup capital to achieve these goals.

    Series C funding
    Series C funding is usually for expanding horizontally, which includes:

     Acquiring other businesses

     Developing new products

     Expanding into new industries

    Investors expect a large ROI from Series C startups that’s not possible in other star-
    tup series stages. Investing at this stage is the least risky, as these businesses have
    a history of growth and generating revenue.

    Series D+ funding
    While some startups expand to Series D or E, these cases are exceedingly rare. If a
    startup reaches Series D, this is usually due to a down round — meaning they didn’t
    turn as much of a profit as they’d hoped in Series C. If a startup moves to Series E,
    this is generally an alternative to going public.

    Startup capital resources


    Kaur 3

    As startups progress from Series A to C, there are different sources from which they
    can secure capital. The most common sources are:

     Venture capitalists

     Incubators and accelerators

     Angel investors

     Small business loans

    Works cited

    1.https://www.hubspot.com/startups/types-of-startup-capital

    2. https://www.startups.com/library/expert-advice/5-types-startup-funding

    3. https://razorpay.com/blog/business-banking/all-about-startup-funding/

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