In our last article on early stage female founder funding I went over the Pre-Seed and Seed stages of funding that startups should take advantage of. In this article I will highlight the growth stage of funding that female founders looking to scale and grow a business should begin to consider as an option to advancing.
Here are the stages I will be reviewing:
- Series A Funding: First round of Venture Capital
- Series B Funding: Second round of Venture Capital
- Series C Funding: Third round of Venture Capital
- IPO: Stock market launch
SERIES A STAGE
It’s the first round of venture capital financing. In this stage, the startup is all set in terms of product development and has to provide preferred stock to investors.
Some characteristics of series A funding are:
- Startup valuation is between $10M-$30M
- During this stage you have a working business modal, your key team is in place, there’s further development of the product/service and you have a scalable market blueprint.
- Approximate funding amount goes up to $15M
Series A stage is the first round of venture capital financing. By now, the startup must have a developed product and a customer base with consistent revenue flow. Now it’s time for them to opt for series A funding and optimize their value offerings. This is an ideal opportunity that allows startups to scale themselves across different markets.
In the Series A funding round, it’s significant to have a plan that will generate long-term profits.
SERIES B STAGE
This stage allows startups to grow so that they can meet the various demands of their customers.
Some characteristics of series B funding are:
- Startup valuation can be between $30M and $60M
- During the stage a startups begin to scale up, increase market share, build high-quality teams and outlive competitors.
- Approximate funding amount can go from $30M
Startups that go through the previous startup funding stages (seed funding and Series A) have already developed a substantial user base alongside a steady stream of revenue. They have proven themselves in front of their investors that they are can achieve success at a larger scale.
Investors assist startups to expand their horizons by funding their market reach activities, increasing their market share, form operational teams such as marketing, business development, and customer success.
SERIES C STAGE
In this stage, startups search for more funding to help them build new products, reach new markets, even acquire other under-performing startups.
Some characteristics of series C funding are:
- Startup valuation can be between $100M and $120M
- During the stage a startups move towards expansion, increase market share, put the company on the IPO track.
- Approximate funding amount can go from $30M
Startups that make it to the series C funding stage should be on their growth path. These startups search for more funding that could help them build new products, reach new markets, even acquire other under-performing startups of the similar industry.
In the series C funding stage, investors happily fund successful startups. They are hopeful to receive a profit that is more than the money they invest. The Series C funding stage focuses on scaling the startup as rapidly as possible.
IPO is the process of offering corporate shares to the general public for the first time.
Some characteristics of IPO funding are:
- Startup valuation can be between $100M in revenue.
- During the stage a startups now have growth-oriented teams, proper and stable financial statements, good corporate governance developed and positive market sentiments.
- Approximate funding amount can go from $50M to $500M
Growing startups that need funding often use this process to generate funds, whereas established organizations use it to allow startup owners to exit some or all of their ownership by selling the shares to the general public.
When a startup decides to go public, a specific set of events occur during the IPO process. They include:
- Formation of an external public offering team comprising of underwriters, lawyers, certified public accountants, and SEC experts.
- Compilation of the startup’s Information including its financial performance as well as its expected future operations.
- Audit of the startup’s financial statements takes place which generates an opinion about its public offering.
- The startup files its prospectus with the SEC and determines a specific date for going public.
Data sources clowdway.com
Marsha Guerrier is a bestselling author, speaker, trainer, business analyst, business coach, and CEO of HerSuiteSpot®, a MWBE and SBE certified small business consulting and coaching agency that provides online and in-person support to early stage female founders looking to accelerate their business.