Series A, Series B and Series C, Hold on..!!! What does that mean ? Alphabets ? Well…!!! Not actually Series A,B,C are terms companies capital and investment or simply say “Funding”. Series A,B,C decides what a company is supposed to do with respect to its funding and capital raising issues. This phenomenon helps an entrepreneur decide whether he should go for bootstrapping or depend on others for seed and further investments.
So, when the talk is about Series A,B,C the main difference which subsequent them depending on the following metrics:
- The purpose and period of raising capital.
- The development or maturity stage of the business or the company.
- The nature and kind of investor involved in the process.
- Allocation of the fund in a varied sector.
Every company follows a funding round which usually kick starts with the “Seed Capital” phase and later followed by the Series A,B,C according to the requirement of the company. These funding rounds are tunnels for a company to progress towards its desired goal or destination.
Have You Ever Wondered, On How Funding Works ???
Well..!! If you take a deep sneak- peak, then you will definitely understand that funding is something which involves a lot of curvy tricks to play. It requires good wit and presence to move smoothly. Where do the funds come from ? “ Investors”, Absolutely. Investors channelize funds into the business. Though they show interest in your business and idea, but at times end asking a portion of the business itself in exchange for money. This is where entrepreneur ends at a diplomatic track, because he wants fund, but at the same time not by letting go off a portion. But in some cases, entrepreneurs agree.
Funding is basically splitting the equity pie with the investor. At the beginning, your pie would be quite small, but with time your pie would definitely become bigger. The pie generally indicates the valuation of the company which is derived by considering the goals, records, management, market condition and size and above all the risk taken by the business.
1. “Seed” Phase:
Every entrepreneur when he sets out to start an enterprise will definitely require seed capital. Seed capital is very much essential to foster the business idea into a growing tree. An entrepreneur hopes to nurture his business in good terms at this stage. Seed capital helps a business to mature as an operating business by making it self- sufficient to cover all the operating expenses and to attract investors in the mere future.
Seed Capital: Helps How ?
- To find out what product, who the consumers are, how the product is going to reach i.e what,who and how.
- Market research and Development (R&D).
- Development of team and product.
Seed investor, are the actual risk- taker because they invest money only based on the idea and raw figures on the enterprise.
2. Series A:
After the seed phase, your business tends to gradually move ahead. So, after a point of time, you would find some progression and records getting developed. And at this stage “Series A” is used to optimize the aspects of business. In this round, the business should make it a point to optimize their products, user as well as the entire business idea. They should find out ways to monetize their business in profitable terms.
The game of survival actually begins. The type of investors that jump into Series A round are mostly from a traditional venture capital firm. This funding round is quite a tricky play as it involves lead firms playing. Angel investors hold a very little stake or say influence in this round. This funding round aims to view the real parameter actions in live.
3. Series B:
In this round, the pie of the company becomes bigger and the venture capitalist comes into action to help the enterprise flourish and expand in the market. This phase is all about the development and expansion of the company. The investors to make and view the pie much bigger in order to get a good share of the pie. Investment money in this round is channeled into business development, expansion and scaling, advertising, marketing, sales, team building and many other crucial elements of the business.
Therefore, Series B plays big to make the product win the market and the users. They process their acts to make big in the long run.
4. Series C:
Series C, the investors generally invest into the flourishing business. Because at this point a business is successful. A business drives towards scaling and growing to great heights. And the investor desire to back more in fact double the investment. In this round, major acquisition and mergers tend to happen for the good fortune of the business. Buying of another company would benefit the competitive chords of the company.
Series C is considered as a less risky one, than the other phases or rounds.
Therefore, each basic round involves a presentation of cash in turn of a equity stake. The only difference is that different type of investor jumps into action with a different list of demands. Whatever it is but, Series funding is beneficial to the entrepreneurs. After all, the main motive of all the funding round is to help the company flourish and grow in good terms. Funding stage also depends on the maturity and the nature of an enterprise.
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