Recently, people have become more curious about the topic of investment and business development. The pandemic made everyone investment-curious and people have been googling the most used phrases in the recent fundings that have taken place.
Terms like pre-seed and Series A and Series B have been used on a regular basis in the corporate news. To make it easier for people to understand the concept, here are the definitions of the most used jargon in the funding process.
Pre-Seed Funding
Pre-Seed funding is the term used for the earliest funding round. In this, a startup raises money to validate its problem-solution hypotheses, propositions, and demand. A Pre-seed capital is needed to set the base for the business operations to commence. This round ensures that the business is a viable one.
Seed Funding
Seed funding, also known as seed money or seed capital, is a form of securities offering in which an investor invests capital in a startup company in exchange for an equity stake or convertible note stake in the company.
Series A Funding
Series A round is the name given to a company’s first significant round of venture capital financing. The name refers to the class of preferred stock sold to investors in exchange for their investment. Series A investors typically purchase 10% to 30% of the company.
Series B Funding
Series B financing is the second round of financing for a business by private equity investors or venture capitalists. Series B investors usually pay a higher share price for investing in the company than Series A investors.
Series C Funding
Series C funding has the goal of preparing a company to be acquired, go public on the stock market, or undergo significant expansion. Some of the most common investors in Series C funding include late-stage VCs, private equity firms, hedge funds, and banks.
