Running a business efficiently and sustaining it involves a lot of challenges in the corporate world. It requires lots and lots of hard work to come at par with your rival companies and to succeed them. But the biggest challenge that people faces is when they are willing to establish their startup platform and run their startup capital successfully. According to a study done by the Small Business Administration Office of Advocacy, it was reported that only 50% of startups are able to succeed in managing their business.
The main reason behind the failure that makes most startups falling within a few years is the lack of capital. Capital plays a vital role in making your base and to sustain the business in the long run. New entrepreneurs who want to set their startup must keep in mind that no business can see the ray of light if it lacks capital. So if you are determined to run your startup for the long run, then it is better to learn the trick in bringing money to promote your business and taking it to the higher horizon.
Knowing About Startup Capital
Startup capital is often referred to as seed money, which is needed to raise money through investment or by seeking help through a bank loan. The cash is utilised for running a new business, manufacturing, marketing campaigns, product development and even for office equipment.
Startup Funding Rounds
After understanding a concise knowledge about Startup capital, it is important to know about startup funding rounds. In simple words, it is a series of investments, needed for raising the capital in starting a new business. These funding rounds have a big role in boosting the startup business for their successful growth and expansion. Startup funding rounds usually take place in three rounds, which is seed-stage funding, early-stage funding and late-stage funding. Let’s understand them one by one.
- Seed Stage Funding
Seed stage funding round is a pre-step in the funding process. In this stage, the founders of a startup business invest their money. They can even seek help from their family and friends to initiate your idea in starting your new venture. With follow up of seed funding round, funds are being provided by the angel investors, before the running of a startup takes place. You can term it as idea phase as startup founders get time to upgrade their product and service. The seed funding investment cost between $10,000 to $2 million dollars.
- Early Stage Funding
After seed-stage funding, comes early-stage funding which works in initial rounds of A and B. In round A, the focus is on startups that are prepared with their actual business model that is expected to draw immense benefits as investors look for a high return on investment. In round A, startups are supposed to be ready with their strategies to take up investments and efficiently making a long term growth.
Coming on to Round B, it signals the growth of a startup, which is expanding and is gaining growth in consumer following. This round of investment will cost you between $7 million to $10 million.
- Late Stage Funding
When a startup moves to Round C, it states its success and stability in business. Also, they are well enough in holding a value of around $100 million and gets receiving upward funding that can go to $50 million. Overall, it displays the startup success who are in a position to expand their reach and launching new products.
Besides understanding the startup capital, now you have also understood the funding support through these 3 round stages which play an important role in the successful growth of startup business and to make it flourish for a longer time. These startup funding rounds are stepping stone in startup business future. So if you are making your beginning as a startup entrepreneur, then these three funding steps are must to be known.