financing, investorsI often see stories about some startup launching a new round of financing. These are normally labeled as series A, B, C etc.
Is there any formal difference between these rounds or are they just a way of labeling investing periods? If there is, what is the timeline or process for a startup to proceed through these rounds?
I liked your question so I upvoted it... but then I kept thinking about it so I went and did some research. Here's what I found (as you can imagine, there's so much between the situation of each startup that these numbers and statements are just ballpark figures and generalizations):
Seed Funding (or Series Seed): A few hundred thousand to a couple million dollars of funding. Funding is raised based on as little as an idea and a nice presentation, maybe a prototype or mockup depending on the scenario. A few months to a year.
Series A Funding: Ready to launch. A few million to $15 million to be used to scale up and start bringing in the first revenues. Apparently significantly harder to get than Seed Funding. Several sites were using the phrase "Series A Crunch" to refer to the fact that the availability of investors willing to give out the smaller sums of money for the potential of an idea is significantly higher than those willing to give out much larger sums of money on an idea that is still not proven. Startups going this route with funding really need to fight hard to get ahead and differentiate themselves from the thousands of other startups looking for series A money. Milestones, goals, and deadlines are set to know when the work for Series A is complete and Series B is ready.
Series B Funding: The viability of the idea has been proven (or not) at this point and it should have a growing userbase. This stage is looking for funding to continue building out the service offered by the startup in preparation for the next phase of focused growth through user acquisition. A couple of sites I read called this the hardest series to find investors for because it was neither the high risk high reward early phase or the lower risk reliable reward series C. Again certain goals and milestones unique to the project would be set to determine the length and scope of this phase.
Series C Funding: The development phase is now essentially complete and it is time to focus on growth, growth, growth, and did I mention growth? You are now fairly well established and tested. Considered a relatively safe investment as long as you show that you can really bring in the numbers as far as gaining users. That's the key to getting series C funding one you've made it this far. They want to see that you can take this proven brand and make it a household name because every new user adds a bit of equity to the company and their bank account grows just a little bit more.
There seems to be some fluidity with the terms, but for the most part this is how I understood the information I ingested.
Here are some of the articles that had a lot of this useful information in them:
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