Investing in the later stage (growth stage) means that the company has developed its product, demonstrated that it has a market opportunity, generated meaningful revenue, and is nearing being point where it could be sold or offered publicly (liquidity event). In other words, it is usually less risky to invest than in the early stage and typically gets more funds from various investors. So now, we will discuss what your startups should do at this stage to grow the business.
‘How many funding rounds does your startup need?’ would show you what is a later stage, who will invest in, and how much they can give you. Following that post, you also can get a later stage has been divided into smaller segments:
What is series A?
Series A typically is considered the first round of venture capital financing. This is the stage of your business plan and pitch deck, where you emphasize product-market fit. As well, the product is being refined, a customer base established, and marketing and advertising ramped up in order to demonstrate consistent revenue flow.
What is series A’s purpose?
A successful series A round requires a long-term profitability plan. Its purpose for the investor is to measure the potential of a commercially viable product or service to support future fundraising. Despite how many enthusiastic users you may have, you need to demonstrate how you’ll monetize your product in the long run.
What should startups do?
The sales numbers of your service or product are key to Series A funding. Before your startup applies for Series A funding, you should be very aware of what your target audience is. By this point in time, your business will likely have gone through an extensive amount of scrutiny by potential investors, which means that you need to have a high potential to successfully enter a large market. So, your startup should:
Conduct additional research needed to support your launch
Upgrade new business plan
Widen your marketing and advertising
Plan to scale into new markets
Fine-tune your product or service
Expand your workforce
Raise the funds needed to execute your plan and attract additional investors
What is series B?
Series B funding is sought when your company has already proven market viability and now needs to expand. Despite bringing in a substantial amount of revenue, you may not be able to expand quickly under an appropriate timeline even if you are bringing in a substantial amount of cash flow. To expand, you’ll likely need a much larger capital investment than earlier ones.
What is series B’s purpose?
The purpose of series B with an investor is to show them your actual performance and evidence of a commercially viable product or service to support future fundraising.
By now, you have formulated a promising idea, demonstrated how your idea fits into the market, gained early traction with customers, and displayed some initial signs of substantial revenue growth. Performance metrics give investors confidence that you and your team can achieve success at a larger scale.
What should startups do?
The Series B investment that you receive can help you expand in a variety of ways. In terms of hiring new employees, the best areas for expansion are marketing, business development, and strategic accounts. Alternatively, you could consider expanding into other market segments, which could bring in more customers. Typically, there are some actions the startups have done in series B:
Expanding consumer interest
Establishing a commercially viable product or service
Scaling production, marketing, and sales
Growing your operations
Expanding new markets
Meeting new customer demands
Competing more successfully
Series C & beyond
What is series C & beyond?
By this stage of fundraising, your business is likely to have been able to convince investors that it will succeed on a long-term basis. This funding is primarily sought when a startup wants to take part in large-scale expansions, typically globalized.
What is series C & beyond’s purpose?
The purpose of these expansions usually involves moving into a new market or acquiring other businesses that you believe are invaluable toward the future success of your company. In this stage of the business cycle, startups that want to expand into a new market are usually looking to expand internationally, which is why so much funding may be needed.
What should startups do?
To receive Series C and subsequent funding, you must be well-established with a strong customer base.
Investing in Series C and beyond is attractive to investors since they carry less risk because of your proven success. There are more investors at this stage besides traditional VC firms, including hedge funds, investment banks, and private equity firms. Startups commonly use these funds for:
Building new products and markets
Establishing a strong customer base
Acquiring other companies
Stabling revenue streams
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Wiziin Inc. provides solutions in capital raising, dealmaking, portfolio monitoring, and fund administration for VC, Angel Investors, and SMEs in the Asia Pacific Region, which is created and run by experienced venture capitalists from Ireland and Canada with an ambitious approach of disruptive investment tool which contributes to leverage the emerging economies.