Every startup that has ever come into existence needs assistance with funding or financing its business. Startups worldwide are becoming more common, and many people are now interested in starting a business instead of working in a company.
But finding the funds to commence a startup is a difficult task. Even though not everyone has the money to start a business at the outset, it is essential for every startup entrepreneur to learn about the various means of finding funds, the different stages of startup funding, and which areas of the lifecycle of a business will require funding.
When a person knows what to look for and where to look for it, acquiring something becomes possible. For an entrepreneur knowing where to look for funds is as important as knowing how to do business.
Stages of Startup Fundraising
There are many stages of conceiving and successfully running a business. To turn a concept into a product or service and build a business plan around it, one must first generate an idea, conduct research, and analyze the market.
After this, the production process and the service’s setting happen, and the business builds around it. Like there are many stages to a business, there are startup funding stages as well, in which the entrepreneur needs to fund the startup at regular intervals based on how the business proceeds.
This helps take the business forward and helps to establish the startup as a fully functional business entity.
There are several types of funding for startups. It could range from types of investors to many different kinds of loaning institutions such as banks, private lenders, and pooling of money by various organizations. These types of funding can be excellent sources for an entrepreneur to tap into.
Below are some of the stages involved in financing or funding a startup:
Initiation or Seed Stage
The initial stage is to fund the idea or concept to become a business. Typically, the investors in this round of funding invest their own money or borrow money from friends and family. This money goes into developing the idea and the product based on the concept.
In this stage, the entrepreneurs complete their business plan using the research data they collect from the market intelligence they have gathered. Venture capitalists or angel investors who can persuad to invest money in the company can provide it at this stage.
With this round of funding, most of the investment will go towards starting the production, marketing the product, and creating ads tailored to the audience.
The expansion of factories, entering new markets, and product development can happen in the subsequent series of funding. Investments can acquire from Angels, VCs, small lenders, or banks.
Within this, there are several stages of Venture Capital financing based on how much investment is required. The locations of Venture capital funding help in improving the business and expanding it globally in the final stages.
The final round of funding goes towards making the company public, and investors can sell their shares.
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