What is Series A funding?
Series A funding is a type of equity-based financing that is relatively similar to seed financing in nature and is considered the first primary round of external funding startups can raise. It frequently refers to the first round of venture money a firm raises after seed and angel investors, and it is applicable when a company is already partially successful.
Also known as Series A financing, the series A funding round is a traditional process. When a privately owned startup of any kind has demonstrated in its opening months or years that it has the potential to grow and generate more dividends it will look for Series A funding.
Series A funding requires obtaining a commitment from investors until a target funding amount is achieved. Investors may be individuals, funds, or financial institutions. Normally, the series A investors will be super-angels, angel groups, or low-level venture capital funds.
With a reasonable business model, startups can gain Series A funding that can enable them truly make it to the next stage in their progress.
What are the objectives of Series A funding?
Series A funding is primarily utilized to ensure a company’s continued growth. And in addition to the continued growth of the company, other objectives include additional market research, covering the salaries of the individuals involved, and finalization of the product or service to be initiated.
Also, among the common purposes in the Series A round are achieving product development milestones and recruiting new personnel. In this stage of growth, a company intends to continue the growth of its business to attract more investors to future rounds of financing.
The successful acquisition of Series A investment will also guarantee that the project is finished, technical risks are mitigated, a revenue stream is solidified, and the firm is prepared to compete for the bigger Series B fundraising round and then Series C funding.
How much money is usually involved in Series A Funding?
The investment from investors for Series A funding completely depends on several factors. Investors will look into the company and will take things such as the valuation of the startup over time and how much it is presently worth into account before determining how much to invest during Series A funding.
But according to research, series A funding is commonly in the range of $1 – 10 million (relying on the value of the business). At this stage, founders may sell anywhere from 10 – 50% of the company ownership.
How to optimize your quest for Series A Funding?
Once the track record of a business is established, the company starts to opt for Series A funding for further development of the business. Investors will review the company’s specifications, including the business valuation, profit margin, and other elements. For Series A funding to be successful, the business owner needs to have a business plan that could lead to long-term profit. Investors usually consider investing in a business with incredible ideas and active staff. And in case these potential investors decide to invest in the business, they will proceed to the details. They figure out how much they will invest, several investment conditions, and what they will get from that investment.
As an exchange for the investment they made, they will receive preferred or common stocks, deferred debt or stock, or an assortment of those.
The majority of investors look for substantial returns of money alongside 200 to 300%, not a unique objective over multiple years.
It is also important to know the different ways businesses can get Series A funding. Depending on the requirements, business owners can get this funding through the following investors: Venture Capitalists, Angel Investors, Private Equity, Crowdfunding, and SBA Microloans.
Getting Series A funding can be difficult and a strenuous process as the whole procedure requires a few, if not multiple aspects that are needed to be taken into consideration by the business owner.
To make this simple for you, you require a guide throughout the entire process. In other words, contact your Damalion expert now for the formalities on how to get Series A funding.
