Startups need outside capital to fuel growth until they are profitable enough to support themselves. Investors are willing to take a risk on the potential of your business and provide funding in exchange for equity (a piece of your company) or debt (money you need to pay back). Managing expectations during each round is key for building sustainable long-term relationships with investors. Be transparent about your growth projections, and align with investors’ goals by focusing on values like transparency and integrity in how you run your business.
Seed funding is typically the first money that a startup receives. It’s used to build a minimum viable product and start getting user feedback. In this stage, startups typically focus on key milestones like conducting thorough market research and developing a proof of concept prototype.
At the Series A stage, startups typically aim to demonstrate significant traction and a clear path toward profitability. They should also be prepared to share a more detailed product roadmap and discuss expansion plans with investors. Some of these plans may include exploring new markets or adjacent customer segments, hiring additional team members, and implementing systems for scale.
Obtaining startup funding can be challenging, but you should always approach it from a position of strength. Thoroughly preparing for meetings and familiarizing yourself with terms like valuation, equity, board representation, and liquidation preferences can help you negotiate confidently. It is important to balance being firm on core issues with showing flexibility where appropriate.