5min
Module 1: The Funding Landscape
Module 2: The Pre-Seed and Seed Stage
Module 3: The Series A Stage
Module 4: Later Stage Funding (Series B and Beyond)
Module 5: The Fundraising Process
1/16 Lessons
Content
Assignment
1.1: The Funding Funnel
Before you can approach an investor, you must understand the complete lifecycle of startup funding. The "funding funnel" is a visual representation of this journey. It's a progressive path where the purpose of funding and the types of investors change at each stage. Understanding this funnel will help you know what to ask for, and more importantly, when to ask for it.
Stage 1: The Pre-Seed & Seed Stage (The Idea)
This is the very beginning of the funnel. Funding at this stage is used to turn an idea into a tangible product and prove a core concept.
Pre-Seed:
This is the earliest stage, typically funded by "friends, family, and founders' personal savings". The purpose is to build a very early version of the product, like an MVP, and get initial validation.
Seed:
The term "seed" refers to planting the first seed of a company. At this stage, you've moved beyond a basic idea and have some initial traction. Funding comes from angel investors and pre-seed venture capital (VC) firms. The goal is to prove your product-market fit and show your business has potential.
Stage 2: The Series A, B, & C Stages (The Growth)
Once you've proven your business model works, the focus shifts from finding product-market fit to scaling the business. This is where institutional investors and larger VC firms get involved.
Serie A:
This is often the first major round of institutional funding. The goal is to scale your validated business model. Investors look for a strong team, a clear market, and metrics that prove your business is ready to grow. Funding comes from "venture capital firms."
Serie B:
These later stages are all about growth and expansion. Funding is used to hire more people, enter new markets, and acquire other companies. The company is now a proven entity, and investors are focused on the long-term potential of the business. Funding at these stages comes from larger VCs and private equity firms.
Stage 3: The Exit (The Return)
The final stage of the funnel is the "exit". This is the event where the company is sold, and investors receive a return on their investment. An exit is the ultimate goal of most venture-backed startups.
IPO (Initial Public Offering):
The company offers its shares to the public for the first time, becoming a publicly traded company.
