Previously in our blog, we dug into the Startup Universe and showed how it can be difficult for startups to grow. We also offered interesting solutions that many of our partners used to rise at the top, but this is not all that an IT outsourcing company can do to help a startup owner.

Today, we want to talk about the startup funding stages, analyzing each step, and explain how we, as an IT outsourcing company, can assist your startup. Therefore, let’s dive even deeper and know the secrets of the universe that can be found easier than one thinks.

What Each Stage Entails

Imagine you’ve got this killer idea that is going to change the world, or at least make it a bit cooler. But unless you have found a pot of gold at the end of a rainbow, you are going to need some cash to turn that brainwave into a booming business. That is where funding stages come into play, and oh boy, it is a journey!

Each stage represents a level of maturity of the company and typically involves raising larger amounts of money as your startup progresses. Therefore, let’s take a closer look at each of these stages and analyze them in order to show you which services for startups an IT outsourcing company can offer to help you to grow and bloom.

Pre-Seed Funding: The “Just Getting Started” Stage

So, you’ve got an idea. It’s fresh, it’s exciting, and you are convinced that it’s going to be the next big thing. Great! But ideas need to be nurtured like tiny seedlings in your startup garden.

You can think of the Pre-seed funding stage as the water and sunshine for your seedling. Pre-seeding funds are usually not the big money that you will see in later rounds. The funds you gather during this stage can be enough to build a prototype or even MVP (Minimum Viable Product), do some market testing, and prepare for building a founding team at the next step. The primary objective is to find initial capital for all these activities so that you will be able to transform your concept into something bigger later. Of course, if you have sufficient resources, you can skip this stage, build an MVP, and start right with the seed funding stage.

Seed Funding: The “Hey, This Might Actually Work” Stage

Once you have something that resembles a business plan and a beta version of your product, you will be ready to fuel up the rocket ship for next phases. Therefore, at this stage, you need to decide what you are ready to show by now: a prototype or even an MVP. It all depends on what your team was capable of at the previous step. The key goal for this stage is to seek funding from early-stage venture capitalists and develop a fully-functional product ready for the market. Therefore, you need to have a business strategy for your product and have something more real to show off than just an idea during the startup pitching events. Otherwise, how would venture capitalists be able to choose you among others?

This is the time for you to find someone besides your friends and family who will be eager to provide support for your product. Therefore, make sure you have at least something to showcase them and be prepared to be as active as possible telling everybody “Hey, I’ve got this cool idea!”

But remember, with great funding comes great responsibility. Investors are looking for a return on their investment, so it’s time to hustle hard, make smart moves, and show them that their money is turning into more money.

Series A Funding: The “Time to Grow Up” Stage

According to Fundz, less than 10% of companies that raise a seed round are successful in then raising a Series A investment. It is typically the first significant round of the startup financing. So, if you have made it to the Series A funding stage, give yourself a pat on the back. It means that you are going to have a business that is more than just an expensive hobby.

All in all, Series A funding is all about growth. Startups that achieved some user traction enter this stage. Venture capitalists (VCs) become your new best friends with very specific expectations written in a contract, so you’ll know that it’s definitely getting serious. Now, you need to look for scaling up, expanding your team, and maybe even obtaining a real office. You need to understand that they are not just throwing money into a wishing well.

Series B Funding: The “Let’s Get Serious” Stage

If you hear someone from your team screaming “Houston, we need a bigger rocket!”, the time has come. Your startup approached the Series B funding stage.

Series B is like the teenage years of your startup. You are growing fast, and it’s kind of awkward and exciting all at once. You have proven that you are not a one-hit-wonder, and now you need money to expand, maybe go international, and start thinking about how your product is going to take over the world.

At this point, your startup is no longer a cool idea you had at the beginning, this is now a product that is making money, and you need to grab the wheel with both hands. So, now the focus should be on business development and market expansion:

• Expand your team even more. Hire more developers, marketers, and salespeople to turn up the volume on your product.
• Grow your market. Take your product global, or at least national. It’s time to go where the fans are.
• Enhance your tech. Make your product slicker, faster, and even more addictive.

Continue reading in our blog: https://xbsoftware.com/blog/stages-of-startup-funding/