According to Wikipedia©; Fundraising or fund-raising is the process of seeking and gathering financial contributions by engaging individuals, businesses, charitable foundations, or governmental agencies.
“Don’t worry about people stealing your design work. Worry about the day they stop.” – Jeffrey Zeldman.
Pre-seed fundraising is the initial stage of funding, so early in the game that countless founders skip it in the equity investment cycle. During this stage, startups are working on an early version with a very small team, and the funds needed could be provided by the founders or their families, relatives, or close friends. Since pre-seed fundraising is a newer element of a startup lifecycle, it's hard to predict how much money a founder might expect to raise during this stage because, it involves investing in an idea, as products typically aren’t developed yet, and businesses may have nothing beyond a prototype. it could be the key to a successful launch if you have a winning idea and a working prototype. As your business grows, you can raise more funds through Seed funding, Series A, Series B, and Series C funding.
As stated above, there are ways to raise funds as your business eventually grows past the initial funding phase.
• Seed funding: Seed funding is the initial official stage of funding that enterprises receive before going on to subsequent rounds, which are known as series A, B, C, and so on. It is used to help a firm go from the concept stage to the initial steps, such as product development or market research. The goal of seed funding is to provide a founding team with sufficient capital to explore a specific idea or market to determine if the concept works.
Seed funding frequently ranges between $500,000 and $2 million, however, this might vary depending on the business's size. A typical seed round value for a startup is between $3 million and $6 million. Investors contribute funds to your firm in exchange for a stake in the company. Angel investors are a popular source of seed funding for start-ups. If you have a good idea and an operational prototype, seed funding is ideal for firms in their early stages and could be the key to an effective launch.
Now, into the BIGGER Funding Phase👇:
Series funding is a term used to describe the different rounds of funding that startups go through to raise capital from investors. The most common series funding rounds are Series A, B, and C, but there are also Series D and E rounds, which are less common. The sole purpose of managing each funding round is to rank payments to investors and ensure that early investors are given firsthand consideration.
• SERIES A: Series A investments are often greater than seed round investments, ranging from $2 million to $15 million. As a result, before committing to a series A investment round, investors will expect more substance than they did for seed funding. Because the bite size is higher, fewer total contributions are made during series A funding rounds. This is a tendency that will continue as we progress from series A to series B and beyond. The larger the round, the fewer check writers there are to support it. The valuation of a company raising series A funding rounds is usually $10 million to $15 million. In this series of funding rounds, it is usually led by one investor, who oversees the round. When the founders get hold of that one investor they solely believe that other investors will fall in line eventually. Sadly, it is at this funding phase that MANY STARTUPS FAIL, also known as "THE Series A Crunch".
• SERIES B: Series B is the second round of funding that startups receive after Series A. Startups that raise Series B are seen as less risky investments since they have proven themselves to a significant degree by generating data points and gaining insights and have already found their product and market fit and need help expanding. Series B investors usually pay a higher price for investing in corporate shares than Series A investors. At the same time, investors will expect you to have a growing list of customers and a proven strategy to grow your customer base. For an investor to take the risk of writing a seven or eight-figure check, they will expect more. Though a fundraising company may still be at an early operational stage, it should generate stable revenues, earn some profit, and have a solid valuation of over $20 million. Most Series B companies have valuations between $30 million and $60 million, with an average of $58 million. Such a business should also have a substantial customer base and demonstrate a strong management model.
• SERIES C: In this round of funding, startups receive after Series B. Businesses raising Series C want to scale up operations and continue growth by reinforcing their successes, expanding into other markets, and developing new products.
• Series D: The fourth round of funding that startups receive after Series C. Series D funding is when most startups get involved with major financial institutions as they prove their company and product. The amount raised and valuations vary widely, especially because so few startups have reached this stage.
• Series E: This is the fifth round of funding that startups receive after Series D. Not many startups raise a Series E seed funding round, but when one does, it’s typically funded by a venture capital firm. Companies that reach this point may be rising for many of the reasons listed in the Series D round.
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