Funding can come from many different sources, knowing which one to aim for depends solely on the stage your startup is in. The below provides a quick overview of the types of funding that you may receive along your entrepreneurial journey.

‍Family and Friends: This is the road that many startups take initially on their journey. It’s always easier to start raising money from those who know you (and love you). However, as your startup begins to grow, the need for a more significant influx of money will make this option non-viable anymore.

‍Crowdfunding Platforms: There are many famous examples of “traditional” crowdfunding models, like Kickstarter. In this platform, people are allowed to pre-purchase goods and services in exchange for some rewards. However, this model is only functional for product-based startups. SaaS startups can use another model called Equity Crowdfunding.

Angel Investors: Angel investors are willing to invest in early-stage startups in exchange for an equity share. To free-up their investment, Angels need some sort of exit (when you sell your company or when you go public). Examples of Miami Angel investors are Rebecca Danta and Maya Baratz.

‍Venture Capital Firms: Unlike Angel Investors, VCs don’t use their own money to fund startups; they use a fund provided by the company’s own investors and the fund’s managers. VCs are on the lookout for promising startups, and they offer funds in exchange for equity. VCs also need an exit to generate a return for their initial investment.

Private Equity: Private equity is when a group of investors makes a direct investment in a company. They typically focus on mature companies that are past the growth stage and always have the intention to be involved to make the company worth more than it was so they can generate a return on their investment.

‍Accelerators: Accelerators offer crash-courses to fast-track your entrepreneurial journey. These courses typically run over a few months, and their goal is to help you save time, money, and much sweat. Accelerators may also offer capital in exchange for equity in your company (usually no more than 10%). An example of an Accelerator is Base Miami, however we take 0% equity.

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There are several different types of funding rounds used to fund startups, which include:

‍Pre-Seed: This stage typically refers to the period in which a company’s founders are first getting their operations off the ground. Founders can expect to receive a small investment from friends and family, early-stage angels, or startup accelerators, often below $1 million. It helps founders hit one or more milestones before they are ready for the “real” investment rounds.

Seed / Angel Round: The first official round of funding for your startup. If you don’t have the capital to support the best idea in your industry you have little chance of surviving. Angel investors are one of the most common sources of seed funding for startups. there’s significant risk when investing in an unproven startup. One of the major advantages of seed funding is that your investors will understand that risk and be willing to take it on. You’ll also benefit from the expertise and network of your investors. From you, they will want to see a working prototype, your MVP (minimum viable product), and at least some initial traction. It’s not uncommon for these rounds to produce anywhere from $10,000 up to $2 million for the startup in question.

‍Series A: Some “Super” Angels may be involved in series A rounds, but you will most commonly be dealing with VCs here, so it’s best to come in prepared. Investing in this stage is still considered high risk, so you must have clear and growing evidence of your product-market-fit. VCs will want to see a significant influx of revenue and growth and increase ARPA (average revenue per account). Let the VCs know precisely how you and your team plan on using the raise to take you to the growth stage.A Series A round of shares is typically offered in exchange for funding.

Series B: It is all about scaling and growth. Your company has a level of stability, a well defined business model and has traction with users. The median Series B startup has a pre-money valuation of $40 million. However, this success isn’t necessarily measured in profits with many still at a net negative profit. Signs of growth during this stage should include an expanding customer base, increased revenue, and success of products and services. During this round of funding by private equity and venture capitalist they look to bulk up on business development, sales, advertising, tech, support, and employees.

‍Series C: Companies that go to this round of investments already have proof of their success and a high valuation. Series C funding is a crucial step for any company hoping to go public, expand their business or be acquired. Most startups consider Series C to be the final round of funding. While it’s possible to undertake later rounds of funding, they’re typically used to help organizations push toward an IPO.

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