Series A funding is one of the early stages of fundraising for established businesses that want to expand.
Series A funding refers to the second stage of startup financing after Seed funding or the first stage of venture capital financing.
Once the track record of a business is created, the company starts to opt for Series A funding for further development of the business.
For Series A funding to be successful, entrepreneurs should be able to show investors what they have done with their Seed money and how they are planning to use any future investment to boost the value of their startup, as investors will review the company’s specifications, including the business valuation, sales, profit margin, and other aspects.
The difference between Seed Round funding and Series A funding
Seed funding is the first official stage of equity funding or the earliest stage of venture capital financing. It refers to funding when there’s no product market entirely figured out yet.
While Series A funding is the next stage of venture capital financing, and it typically involves various people who seek to gain some equity in the company. Series A funding tends to happen when a company has some track record, and the funds are used to keep the company working and thriving.
- Difference between seed funding and Series A funding
Seed funding is generally used to finance a startup’s initial costs, such as product development and market research, and it occurs before Series A funding.
And Series A funding is generally used to finance a startup’s growth, such as hiring new employees and expanding into new markets, and it mainly lies in the stage in which a company finds itself when wanting to fundraise.
Some companies may take out a line of credit as part of their seed funding, while Series A funding is equity-based.
How much money is usually involved in a Series A funding round?
This really depends on the startup as Series A rounds differ in size in comparison to seed funding, and it commonly ranges from $3 million to $15 million.
Research notes that the majority of Series A rounds are less than $9M, and the median Series A round was $8.6M nationwide.
Series A funding generally comes from venture capital firms, although angel investors may also be involved. In addition to more traditional methods, equity crowdfunding can also be used in series A financing.
The main advantages of Series A financing for startups
Series A financing provides startups with the capital they require to scale their operations and grow their businesses. And is often recognized as a validation of a startup’s business model and its potential for long-term success.
When a startup receives series A funding, the business will likely benefit from the professional connections of the investors. Also, when a venture capital firm decides to invest in an idea through series A funding, it means that the firm thinks that the business has high growth potential.
Series A financings usually result in increased visibility for the startup, which will in turn help attract new customers and partners. And for venture capitalists, a successful Series A investment provides an exit opportunity when the startup is ultimately sold or goes public.
Conclusion
As an entrepreneur, if you are considering the idea of raising money through Series A funding, you should know how it works and you should also get proper counsel on which is the most suitable structure for your business. But look no further, your Damalion expert can help in this aspect.
To increase your chances of securing Series A Funding for your business, let’s go ahead and contact your Damalion expert now.
