If you want to grow your startup, you need funding. And, if raising funding, particularly venture capital, it’s important to understand the various funding stages. Below is a breakdown of each of the key stages of business funding, from when your business is simply in the idea phase to when you’re ready to go public.

Pre-Seed Funding

Pre-seed funding is typically the first official round of funding. It is used to help businesses transform their ideas into viable products or services. At this stage, the company is usually working on developing a prototype or researching the viability of its product. 

Pre-seed funding sources include the founders' personal savings, or family, friends, or angel investors who invest because they believe in the potential of the business. On this note, you should consider using AI to generate your business plan to speed up the process of creating your plan.

The goal of pre-seed funding is to validate your business concept. This phase often involves creating a minimum viable product (MVP) Collaborating with an MVP development service, testing the market’s reaction to your product, and starting to build your team. The amount raised in pre-seed funding can vary widely, but usually ranges from $50,000 to $200,000.

Seed Funding

Once a startup has a viable product or service and has verified the need in the market, it progresses to the seed funding stage. Seed funding is typically used to help startups refine the product and/or expand their team. This stage is important for strengthening your core concept and proving your potential to larger investors.

Seed funding typically comes from angel investors and venture capital firms, although it can also come from other places like crowdfunding platforms. The amount raised during this stage typically ranges from $500,000 to $2 million depending on your industry of business type. 

Early Stage Investment (Series A & B)

In this phase, startups are growing. This stage has two parts: Series A and B.

Series A:

In Series A, startups here often have a proven product, growing customers, and a clear path to profitability. Investors (usually venture capital firms) look for strong growth potential.

Series A funding is typically in the $2 million to $15 million range. Series A funding is used to:

• Perfect/refine the product

• Develop a solid business model

• Expand your customer base

• Expand your team

To get this money, show measurable progress and a clear market strategy.

Series B:

Series B funding takes your growth to the next level. Companies here already have:

• A solid market presence

• Steady revenue

• A scalable business model

Series B is for further expansion; to new markets and better products/services.

Typical amounts of funding are $10 million to $50 million. Investors want startups with some success but lots of growth potential. The money often goes to:

• Funding large marketing campaigns

• International expansion

• Strategic partnerships

Later Stage Investment (Series C, D, & beyond)

These funding rounds help achieve wider reach and prepare your company for an exit (selling or IPO). These rounds typically involve a significant amount of money for mature startups with strong market presence & proven business models.

Series C:

Often used to penetrate new markets, create new products, or for acquiring similar companies. Funding can range from $50 million to hundreds of millions of dollars.

Series D & Beyond:

This funding is used for additional growth and/or addressing challenges before an exit. It involves significant investments from venture capital, private equity, and/or strategic investors.

Mezzanine Financing

Mezzanine financing is typically a mix of debt and equity financing. It's for startups preparing for IPO or acquisition. It's like a bridge between funding rounds and the exit.

This lets startups get money without giving up too much control right away. The funds are often used for:

• Expanding operations

• Making strategic acquisitions

• Enhancing product development

Initial Public Offering (IPO)

Many startups dream of an IPO. An IPO means selling company shares to the public on a stock exchange. It raises lots of money and allows initial investors to be repaid (and earn a return on their initial investment).

Getting ready for an IPO is challenging. You need:

• Strong financial & legal prep

• Solid financial reporting system

• Strong leadership

IPO funding is often used for:

• Further expansion

• Product development

• Strengthening market position

To sum up: Each funding stage is crucial. It can take your company from the idea phase to a public company. Knowing the stages outline above should help you:

• Navigate the funding landscape

• Attract the right investors

• Reach your growth goals

When used correctly, each funding round builds a solid foundation, scales operations, and turns your vision into reality. Here's an additional tool you can use for your Invoice Template for Google Docs.