The first round of funding is known as the Series A. During this round, the startup business receives funds from a venture capital firm. It is important at this stage that a plan on the development of the business model is made so long-term profit can be generated. At this stage, the investors look for companies that have great ideas and have a strong strategy to turn that idea into a successful, money-making business.
Startups failing is not a new phenomenon. Numerous studies have been the subject of how and why startups fail. Most studies indicate, that the number one reason for startup failure is: there was no need for the product or service. Making a better product that no one needs is a sure shot way to kill a startup. Interestingly enough, 3 out of the top 5 reasons have to do with financial aspects: running out of money, the competition was quicker or more efficient, and pricing and cost issues.
Stages of a Startup: The pre-seed stage is the initial funding or as we like to call it the genesis fund. In this stage, the goal is to take an idea or concept and turn it into a tangible business. At this stage, the business is not expected to have a market-ready product or service. Startups will usually opt to secure pre-seed funding by presenting a pitch deck.
Seed funding is one of the initial stages of funding required to get a business started. It is important for the entrepreneurs to plan for finances as soon as they have decided to start a new venture because expenses are incurred from the very beginning, even before the company becomes operational. Seed funding can come from business owners, friends, and family to support preliminary activities such as market research, business plan development, product research, and development.