Funding is the lifeblood of a business. For without a sustainable financial foundation, one’s likelihood of entrepreneurial success is greatly diminished.
There are three round of business funding each comes at a different stage is the business’s growth.
Round 1 is institutional financing for a business and is often directed by one or more venture investors. Estimation in this round reflects advancements achieved with seed capital, management team consultation and other evaluative benchmarks. Success at this funding stage allows a company to proceed forward along a number of different fronts, including development, talent acquisition, business development initiatives and other activities valuable to their business expansion.
Round 2 typically takes place when the company has reached certain milestones and is beyond the initial startup stage. Funding at this financing round can occur in various ways including private equity, venture capital, crowdfunding and credit investments. Financing acquired may be directed toward a number of different aims including operational enhancement, product development, revenue systems, as well as value creation for the next funding stage.
Round 3 is a later-stage financing mechanism that businesses often employ to strengthen their balance sheet, acquire operating capital, finance an acquisition, launch new products/services, or prepare the company for an IPO or acquisition exit. The company often has a solid track record at this juncture of its business trajectory providing outside investors with multiple levels of reassurance to justify a higher valuation.
For a business to succeed the rounds of business funding must be done in order. This will ensure proper growth and success of the business.