What are the different stages of startup funding? Inception, seed stage, early stage, growth stage, bridge stage and exit.
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Links for the startup funding series:
Part 1 – Pre-Requisites for Funding –
Part 2 – Sources of Funding –
Part 3 – Process of Funding –
Let’s have a deeper look in to the different stages of equity based funding.
The inception stage is primarily focused on building the prototype or the minimum viable product and validating the business concept. It is almost impossible to raise funds at this stage unless you have a proven entrepreneurial record of creating a large business. So, I would suggest that you bootstrap during the inception stage.
Once you have established the feasibility of the business concept and created considerable traction for your business, it is now suitable for the seed stage. At this stage the investors would be expecting at a return of 15 to 20 times their investment over a period of 5 to 7 years. The seed stage is focused on building the core team, product optimization, exploring avenues for monetization.
Once you have created the footprint in the market the business qualifies for Early stage investment. An early stage investor usually looks at a return of 10 to 15 times. Early stage funding is primarily focused towards business expansion and increasing customer traction.
Once the business has established a solid market position, and is at a point of influx, the investment stages that follow are growth and expansion stages. The core focus of these phase are business expansion and scaling up. For these phases, investors usually expect 5 to 10x return.
The bridge or exit stage is usually of very large transactions and for companies with substantial valuation. These phases are focused on inorganic growth, mergers, buy outs, acquisitions and exit preparation for the business. During this phase investors usually look for a 3 to 5 x return on the capital invested.
If you need any help with your business planning and funding exercise feel free to contact the team at Bplan Experts ( .
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