Securing funding is, without a doubt, a big relief for any startup business. However, obtaining finances is only the beginning of the adventure. Funds will just push your startup to the next level, which means you will have to work faster in terms of completing more work, meeting deadlines, and taking on more responsibilities.
What comes after funding and what are the important things you should consider to guarantee that the funds are used effectively are two questions that follow thereafter. The actions you take after receiving your investment are far more important than the amount of money you raised. This is where expert assistance or guidance from the industry makes a big difference.
Coffeemug.ai, which is an online networking platform helps connect young entrepreneurs with industry professionals and seek valuable knowledge on how to manage funds and grow business exponentially. Let’s start with the basics first: What are the funding stages for startups?
The stages of obtaining finance for a startup are as follows:
1. Pre-seed funding stage
This is also known as the bootstrapping stage and primarily entails the startup founders using their own funds or borrowing from friends and family. During this phase, the startup idea is being tested for its feasibility and scalability.
2. Seed Funding phase
During the seed funding phase, the founders attempt to raise funds in order to perform market research in order to learn about the interests and preferences of their target clients. This is also the stage at which the product is officially introduced, and it is ready for launching into the market.
The founders also make a serious effort to gain traction in order to ensure a steady flow of money; otherwise, the business may be forced to close.
3. Venture Capital phase
In this phase, the startups try to raise funds through a series of funding rounds such as Series A, B, C, and D. Each round, the firm raises a bigger amount of money and improves its valuation.
- Series A: This is the venture capital stage’s first round of funding. At this phase, the firm should have developed a product or service and established a customer base with a steady revenue stream.
- Series B: This is the expansion stage, wherein the startup secure fundings to strengthen the company’s customer base, hire more staff, and management team.
- Series C: By the time a company reaches this phase, it is on the development path and needs further capital to develop new products, expand into new areas, and even consider purchasing other underperforming businesses.
- Series D: Only a small percentage of companies see the value in moving forward to this stage. Other businesses skip this step for two reasons: first, they haven’t met their previous deadlines or targets. Second, the company has discovered a fresh opportunity and wishes to focus on it before pursuing an IPO.
4. IPO
An initial public offering (IPO) is the pinnacle of startup success. It occurs when the company’s shares are initially made available for public purchase. The IPO is utilized to raise funding for further expansion or to allow the founders of the company to cash out their remaining shares for personal gain.
Six things to do after you have raised funds:
1. Hire new talent:
Don’t fall into the trap of thinking your existing team is enough and it’s time to coast. If you want to do anything significant, you’re going to have to hire new people with skills that complement your own but are not necessarily possessed by you.
2. Hire a great CEO:
You might be very successful as a founder or early-stage leader but if you’ve raised any kind of institutional capital then the next logical step is hiring someone who can take your company from the startup phase to being ready for phase 2 growth. The CEO role isn’t always easy to fill, so finding someone great will require a lot of work on your part.
3. Develop or expand your product
Your new funding is a chance to “press the gas pedal” and make your product or service even better. This is a crucial step to gain a competitive advantage in the market and attract more customers.
4. Expand your market:
The next step after refining your product is usually to introduce it to more consumers (or businesses). This means spending money on areas like marketing, sales, and PR. It can be expensive but without it, you won’t grow very quickly – if at all – and that’s not what equity investors like to see.
5. Develop a proper marketing plan:
You can’t sell an average product to everyone, everywhere, but you may reach a large market with the appropriate network. Coffeemug.ai not only helps you connect with a large set of peers, but it also helps you explore new markets, both domestically and globally.
6. Take the company public:
If you have hit all of your milestones then it’s time to get serious about an exit strategy, even if that means just taking the company public rather than selling it. The next logical step after becoming a public company is usually to buy out another business or two in order to increase its size and number of employees while also generating some revenue growth. That’s when your business goes from startup to a full-fledged enterprise.
Conclusion
Starting a business is a big decision that comes with a lot of worries, troubles, misunderstandings, and issues. One of the most effective ways to address this issue is to seek advice from Coffeemug.ai specialists who have successfully navigated a similar path and are part of the ecosystem. Visit our website to learn more about what comes after funding?
FAQs
Q. What is follow on funding?
A. When a private equity (PE) firm has previously invested in a business but chooses to give away additional funds is known as “follow-on funding”
Q. What are the three types of funding?
A. Venture capital funds, angel investors, and private equity funds are the three common types of funding. When looking for funds, the startup should consider larger firms that have extensive networks and subject matter expertise in the industry.
Q. What is the first round of funding for a startup called?
A. Seed funding is officially the first round of funding for a startup. During this stage, the founders attempt to raise funds for conducting market research and attracting more customer interest.
Q. What is the investment period of a fund?
A. The Investment Period is simply the fundraising period, wherein a PR firm is permitted to accept new investors or subscriptions.
