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Samanya Bansal

Marquee Equity

Fellowship Assignment

28 February 2022

Different Types of Capital that startups raise

Introduction

Startups can get money in a variety of methods to start and grow their businesses. No

matter how great a product or service may be, startup owners are aware that they will need

funding to expand their concepts. Numerous startups seek out traditional sources of startup

financing, also referred to as series funding. Additionally, there are non-series funding options.

Usually used in addition to series startup funding

Overview

For many startups, pre-seed startup capital represents the initial round of financing.

Founders typically continue to lead the majority of startup activities at this point. Pre-seed stage

founders frequently "bootstrap," or raise money from friends and family, as opposed to using

more conventional financing sources. Pre-seed financing pays for the costs associated with

establishing the seed startup. Funding for seed startups is used to support product creation and

market research. Friends, family, and occasionally venture capitalists serve as the majority of

investors at this point. The typical seed round for companies is $1 million. The sum of money a

startup requires at this stage depends on the sector, the good or service, etc.

After their product has a steady user base and achieves product-market fit, founders

research Series A startup funding. Series A startup funding typically supports the growth of the

company's product or target market. With Series A, founders concentrate on making the best
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possible return on investment (ROI) for both themselves and their clients. Companies in the

Series B stage typically perform well and have a steady user base. Startups with Series B funding

can grow to accommodate the escalating demand from customers. A startup is less hazardous at

this stage, but it's still crucial to concentrate on scaling sustainably. Although some firms do

grow to Series D or E, these situations are incredibly uncommon. If a startup makes it to Series

D, it usually means that their Series C round wasn't as profitable as they'd intended. Moving to

Series E is typically an option to going public for startups.

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Citations

5 types of investors. Larta Institute. (2021, August 7). Retrieved August 27, 2022, from

https://larta.org/idea/5-types-of-investors/

MSMEx, T. (2022, May 2). Who are investors? 5 different types of investors &

definitions. Who are Investors? 5 Different Types of Investors & Definitions.

Retrieved August 27, 2022, from

https://www.msmex.in/learn/different-types-of-investors-and-definitions/

Types of investors: Everything you need to know. UpCounsel. (n.d.). Retrieved August

27, 2022, from https://www.upcounsel.com/types-of-investors