Regarding small business marketing, cash flow is often your central obstacle and guide to Seed Funding. You may have the idea, the product, or even the prototype ready, but reaching out to the public can be an impossible task without extensive business infrastructure around you, such as a website, shop space, warehousing, production lines, and, of course, wages for your employees.

If you’re wondering how other startups made it, the answer is seed funding, also known as angel investment. You don’t have to be a millionaire to achieve your startup dreams; you only have to acquire funding from investors willing to support your vision.

In return, investors often acquire equity in your company, which means your success is their success. For this reason, good venture capital firms offer not just investors but mentors to guide your business through the early stages, as well as industry links and solutions to evolve your brand rapidly. This blog will talk about the four stages of seed funding and how to get the most out of each opportunity.

Seed Round

Using the analogy of a tree, the “seed round” is when the first seeds are planted to help grow your business. In this stage (sometimes called Series A), you may receive the first official guide to Seed Funding money your business has raised and use this money to invest in your business to build out its infrastructure directly.

Things like market research and product development are expected at this stage. You may also elect to use seed funds to employ your founding team or rent out an office space. The seed round should also be used to iron out any problems or concerns about your idea. By the end of the seed round, you should have a working prototype. The key to this phase is reviewing, refining, and developing your idea, setting up your basic infrastructure, and preparing your business to operate viably.

Series A

Also called the “launch phase,” this is where you switch your business from idea to reality. In short, it’s the grand opening. It’s also a period where you need to wait, observe and learn most. If your launch was less of a take-off than a take-two, this phase is your best opportunity to redirect funding into marketing, new distribution channels, and new markets.

It’s also not too late to address problems or fine-tune your product or service. Here, your seed funding can assist in a mentorship capacity and help you make sense of the market. In the launch phase, you lay the foundations of your later success. Flexibility, compromise, and optimism must overcome those initial hurdles until you have your “jackpot” moment. You’ll also see the rapid growth of business outlays and infrastructure during this period, with sales, advertising, tech, support, and more hires.

Series B 

Series B can appear similar to Series A in that it is a continuation of the same growth period and not without growing pains. Here, it would help if you struck a balance between business stability and business growth. Your funding mentors and advisors will be indispensable resources at this time, especially regarding industry contacts and building your business out. The best mentors will impart some of their well-honed judgment on when to move ahead and toe the line.

As your business grows, so too should the amount of interest it generates. Series B is where you go on to acquire additional funding for expansion and where your business, as it stands, starts to take on real value. With a new wave of venture capital, your business is ready for the last phase of seed funding development.

Series C

This is the big pond with the big fish. Your business is established, successful, and turning a profit. However, business development is never done, and in this phase, you have the opportunity to develop new products, expand into new markets and even acquire competitor businesses. This phase is about scaling rapidly and becoming a household name in your field.

Series C is also an opportunity to make your business less risky. Prepare it to be as attractive to investors and the market as possible. Mergers are common in this phase and substantially build out your business plan. You are almost touching the line of an IPO, so your seed funding and the new funding will be shaped by how to best position your business for offering shares.

Think Ten Steps Ahead Guide to Seed Funding

Think10 matches guide to Seed Funding for promising entrepreneurs with capital and co-investment opportunities, strategic support, networking, and mentoring. Talk to us today to take the first steps.

Chris Cutout

Chris Dixon

Fund manager

Chris Dixon is a Think10 Capital’s Digital Fund Manager with specific responsibilities of managing digital funds and driving strategic growth. Dixon brings his experiences in capital and investment management through prior involvement in private equity and institutional investment in the United States. Over the past decade Dixon has lived and worked in Melbourne, Australia where he now resides.