Startups typically experience a turbulent set of trips during their lifespan. As a startup expands, money becomes an ever-more-critical requirement. Startups can focus on several aspects including product development, scaling up, expansion, innovation, research, and development with the help of funding at various phases.
While only a small number of businesses often succeed without requiring much cash, the majority of entrepreneurs undertake numerous attempts to secure sufficient funding through rounds of outside investment.
Following the completion of a seed fundraising round for a startup, the subsequent rounds are known as series funding and are divided into Series A, B, and C, accordingly.
The first of these three funding rounds, Series A, normally follows a schedule for these Series fundings. The search for Series A capital can take many firms years, yet it comes naturally to other startups to get their foot in the door. A startup can use the Series funding as a stepping stone to eventually become a Unicorn or to register for an Initial Public Offering (IPO).
Similar to seed funding, investors participate in startups during the Series A, B, and C rounds of funding in exchange for stock. The profitability of a startup is closely related to the returns received by investors.
A company must be valued before receiving any investment, and this valuation is dependent on a number of variables, including management, past performance, market size, risk, and liabilities.
Here is an explanation of what Series A, B, and C funds mean.
Funding for Series A
A firm may decide to pursue a Series A round of funding once it has built up a reliable client base and an ongoing income stream. The firm in question can use this investment to expand their customer base and seize possibilities to scale their product across other markets. A long-term business plan is typically created by an Indian startup after getting Series A funding. Series A investments typically range from $2 million to $15 million. Investors prefer a business plan that outlines how to turn a brilliant idea into a profitable venture rather than a great idea itself.
Funding for Series B
Startups seeking Series B capital are mostly looking to grow and develop their companies. Startups are assisted by investors by their increased market reach. Companies that have undergone Series A and Seed fundraising rounds have established sizable user bases and shown investors that they are ready for success on a broader scale. A startup’s growth is typically financed by a series B round in order to keep up with rising demand. The average Series B fundraising is $33 million, with fundings ranging from $30 million to $60 million.
Funding for Series C
Startups are typically quite successful by the time they receive money in the Series C round. The purpose of the Series C round of fundraising is to help startups raise money so they may create new products, expand into new areas, or possibly even buy out rival companies. Typically, during the Series C round of funding, investors anticipate a 200% return on their investment. Companies competing for Series C capital typically want to go public or grow internationally. 118 million dollars is typically the estimated valuation of startups when they request Series C funding.
This essay aims to explain series funds in plain language because they represent a crucial step on every startup’s route to success.