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All about Investments and Funding At Various Stages

Abhishek Kumar Singh
Abhishek Kumar Singh Aug 27 2021 - 3 min read
All about Investments and Funding At Various Stages
There are three main types or stages of investment which we will discuss in this article

No matter how revolutionary an idea is, it takes money and effort for turning ideas into business. Any kind of business refers to providing quality products or services in exchange for money. To serve better you need resources and branding. Quality takes money. If you want to earn high profits you must invest more and work more. Every business is starting, need money to establish itself and run smoothly. Entrepreneurs rely on investors for capital. Entrepreneurs get funded by investors. in exchange for the amount invested by them, investors get some partnership or they give money as loans.

Seed Funding

Seed funding can be thought of as a tool for growing a successful business tree. In simple words, funding given to turn a start-up into a successful business is called seed funding. Anyone having their trust in an idea and company can provide seed funding. Mostly, people from the personal channel of entrepreneurs like family members, friends and co-workers do the job. There are multiple examples of how seed funding helped businesses to grow.

There are three more stages of investment after getting seed funding which we will discuss further.

Series A

After getting started and incepted as a full-fledged business, the company needs investments to go further. They look for big investors so that they can provide the best service to the customers. Investors which were interested in the idea of business in the seed-funding stage, shift to know about how powerful their strategy is. Investors lose their interest if they find the strategy is not good. This leads to entrepreneurs offering loans in the lieu of partnership in the company. Here, old investors work like magnets to attract more people to invest. Angel investors invest will less invest as the company itself is pre-established and has some brand value.

In series A it is natural for brands to use equity crowdfunding. As the company goes successful people tend to be partners in the venture instead of giving a loan and getting it back. Furthermore, the company get the desired amount easily by equity crowdfunding.

Series B

After seed and Series A, businesses get ready to make new progress. Series B funding is needed to reach new markets and expansion in currents markets. It also helps fulfilling marketing demand with the same quality products and services.  Companies having sizable user bases do not need to prove their abilities for success repeatedly.

Companies subjecting to series B funding are well settled and have a large user base. Brands normally go for series B funding when they find themselves helpless in front of rising market demand.

Creating a product that everyone needs and meets growing demand requires a level of knowledge and capital. Sales, marketing, technology supports, administration cost big when done at a higher level.

Both series A and B funding are similar as they include previous investors to get more investors.

Series C

Series C funding is the final way to deal with market demand.  It happens at a stage where the company becomes powerful and have a clutch over the market. Companies need to expand not only in the market but also tries to find ways to monopolise the market. For instance, XYZ is a boot manufacturing company doing well in the US.

When the company come to India it buys existing competitors for avoiding competition benefits. So we can say, Series C funding is used for buying and allying with other companies.

Conclusion

Investment plays a very important role in the development of the company. Overall, money is what makes a business successful. If you need to grow your business at a continuously increasing pace, you must understand and work for making you company go through all these three phases.

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