Startup Funding Rounds: The Funding Life Cycle

The Stages of Startup Funding Rounds

The funding and development stages of a startup vary significantly depending on the source of information used. However, while there is some overlap in the descriptors, it should be noted that this is appropriate. Each company is different, and various parts of these companies may be at different startup funding rounds. Here are the levels/stages of the funding life cycle, from the concept stage through the mezzanine financing stage (and finally, the exit stage).

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Concept Stage

The initial stage is the Concept Stage, the stage at which the entrepreneur begins to develop the idea in their mind.

Seed Stage

Following the concept stage is the Seed Stage. It’s at this stage that the concept begins the process of being vetted and if appropriate, validated.  Friends and family investment is typical at this stage.

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Early Stage

The Early Stage, following the initial validation by third parties in the seed stage comes next.  Development of the product, infrastructure and team proceed and late in this stage, the company begins its growth effort.  Angels invest heavily at the later points of this stage.

Growth Stage

The growth effort referenced above is the beginnings of the Growth Stage; during this stage the company endeavors to grow sales.  It is usually financed by follow-up financing from angel groups, super angels, larger angel groups, angel syndicates and VCs as part of Series A, and as such this growth which began late in the Early Stage extends into the Mezzanine stage.

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Mezzanine Financing Stage

Expansion continues in the Mezzanine Financing Stage as the venture attempts to scale its sales.  The venture is typically financed in this stage by VCs with a Series A or B round.  Depending on the development of the company the Mezzanine financing may, like the exit stage be considered a bridge round.

Exit Stage

The last of the startup funding rounds is the Exit stage, which requires a bridge round (Series B or C) from VCs and culminates in an IPO or sale to a strategic player.

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