Funding: Key Factor Supporting the Growth of a Startup

By StartUp City | Tuesday, December 10, 2019

The execution of big ideas in the startups determines many crucial factors including the problems to be solved, the products that are needed to be sold, and the number of people required to finish a target work. The entrepreneurs of the startups need to raise funds in order to meet the ever evolving requirements of the organization and their employees. The raised funds play a significant role in the growth and development of the startups

Fremont, CA: A startup can be considered as a small business with a super quick introduction along with the goals of fast and dynamic growth, requiring massive funding in a very short period of time. Startup funding seems to be much risky, as the startup companies themselves are at risk.

Since the startups are way different from the traditional small businesses, their funding processes are also different. In order to raise funds, the startups approach the concerned executive of the venture capital firms. Once the research process as well as the discovery meetings are over, the investors takes the process further, by investing. The first round of funding is known as seed-stage funding; this takes place during the launch of a startup. After this, the advanced stages of funding i.e. series A, series B occur. Once the process of funding gets over, the venture capital firms begins to earn the money they invested through mergers, acquisitions, and sales procedures. Since the investors need to get a return on their investment, raising funds from multiple investors can be a threat to the startups, thereby leading it to a huge debt.

Other than the funds, the growth of the startups depends on the accelerators and Incubators. The accelerators are specially designed for the short time frame with an intense operation process, wherein the startups can be guided by the experienced mentors offering support and resources to the startups. Incubators provide a network of mentors that are much smaller than the accelerator's network.

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