Startup funding 101
When you think ‘seed funding’ sounds like you’re going to the flower store and ‘series A’ sounds like you’re about to have a binge on Netflix...
I had no idea what ‘seed funding’ and ‘series’ of investments meant a week ago.
Fortunately ‘Angel’ by Jason Calacanis helped me go from 🤷♀️ -> 🤗
Here’s a high level summary:
Sweat-equity 🥵 : when founders work for free earning equity (i.e. ownership) in the company
Boot-strap 🥾 : sweat equity + outside help (but not from formal investors), e.g., a client willing to pay for a forthcoming product
Friend + family 👨👩👧👦 : Funding from personal nonprofessional angels
Self funding 💪 : Self-funded founders/start-ups
Incubator/accelerator funding 🚀: a dedicated program (think Startmate accelerator program) giving founders seed funding for equity (often 5-10%) + perks like advisors and intros. I think of this as helping founders ‘incubate’ an idea before it explodes into the world
Seed 🌱 funding :
Seed capital [equity] (i.e., $ to get business off the ground) from personal connections
Angel funding 😇 :
Angels are high-net-worth individuals who provide $/advice for equity
Bridge round (AKA 🌱 plus): ‘bridge money’ if startups run out before reaching targets/profitability
⬇️
Series A 💵: Big players enter: professional venture cap firms 💼. The startup has success in key performance indicators (e.g., an established user base, consistent revenue figures) + now looking to optimise its user base and product offerings. They’ve got a strong strategy for turning the idea into a successful business
Series B 💰 : Investments in companies moving past the development stage ➡️ expanding market reach. (Often this means building a product + growing a team etc)
Series C 🤑 : Successful companies looking to expand (e.g., develop new products, go into new markets or acquire other companies).
Kudos to Jason Calacanis + Series A, B, C Funding: How It Works
🤔 As I’m a beginner + ❤️ learning if you’ve got any comments/additions/edits to make let me know and I’ll update!
Hope that helps,
Veronica