As any entrepreneur knows, starting a business requires significant capital to keep the lights on and fuel growth. Until a startup proves that it can earn enough revenue to cover operating expenses, the only way it can survive is with outside capital — typically in exchange for a stake in the company or debt (which it will need to repay later).
Startup funding options vary widely. Founders can raise money from angel investors, seed funds or venture capital firms, or they can take the risk of leveraging their own savings to fund their startup. Ultimately, the best method of startup funding will depend on each company’s specific goals and strategies.
Series C funding is a mark of success for a startup, and it can help companies grow quickly by expanding into new markets or acquiring other startups. Private equity funds, hedge funds and investment banks are major players at this stage, seeking to invest in promising startups with a high potential for return.
In the early stages, entrepreneurs can turn to friends and family to provide startup funding. This option can dilute a startup’s equity, however, and it’s important for entrepreneurs to carefully weigh this decision and clearly outline legal documents with their loved ones. It’s also helpful to plan out the equity distribution for each round of funding, taking into account key development milestones and the overall company valuation. Alternatively, startup entrepreneurs can seek non-dilutive grants from government agencies and foundations.