FINANCING ACCORDING TO THE STAGES IN THE CREATION OF A COMPANY

Accelerate your business with these tips "Financing according to the stages in the creation of a business". Analyse and discover this TIP!

In this TIP, we propose a review of the phases or stages that startups usually go through from the moment the entrepreneur identifies a business opportunity until, once in the market, they begin to grow. This will give you a clear vision of what you need to do in each of them in order to achieve success with your business. As we shall see, funding and growth capacity are two constant variables that condition the development of start-ups. It is very important that you know what phase or stage you are in to be clear about what the next step is so that you can move forward faster. At each stage you have different needs, so it is essential that when you plan your pitch with an expert, investor... you make it clear at what stage you are, what steps you have taken and what are the next steps you want to take.

Stages of a startup looking for an investor (business angel, venture capital....) 

Pre-Seed or pre-seed

This stage starts from the moment a business idea emerges, but it is not the first stage. the product is not yet fully validated and certainly there is no or only very token turnover. In this phase, it is the founders themselves who make the first capital injection with their own funds and the well-known 3Fs are also often used: "...", "...", "...", "...", "..." and "...".Family, Friends and fools."Generally the investment made in this phase is less than €50,000 (in Spain, €100,000 in the US).

• What are its characteristics?
  • There is already a founding team (of two or three people), may still be incomplete.
  • The entrepreneur has a fairly clear idea of the problem it addresses and how to solve it. I might even have a MVP (minimum viable product) of the product.
  • It wants to raise a relatively small round (no more than €100,000) in order to develop and test the product.
  • No or non-recurrent income.

Seed

At this stage the startup already has a finished product and a defined and functioning business model. It has a full team and has started to bill on a more stable and recurring basis. They are usually looking for rounds of less than €300,000.

• What are its characteristics? 

• • The recruitment of more people to the team is normally considered in order to develop and scale up the product.
  • The product is already on the marketis known to a growing number of customer users. It is time to demonstrate traction (see TIP), that is to revalidate the business model in contact with the market.
  • The focus in this phase is NOT necessarily on increasing revenues.The focus is on continuing to develop the product and iterate, to grow in users, retention and loyalty.

Growth

Once the market launch is over and with recurring sales, the startup is now entering its growth phase, focusing on optimising operations and scaling sales, which requires an injection of capital to undertake new investments.

In this phase, startups are categorised by "series":

Serie A (rounds not exceeding €1M):

1. Staff of more than 25 people.
2. Own sales team with the prospect of expanding it in order to increase sales, building loyalty among current customers while adding new customers to the portfolio.  
3. Revenue (under one million euros) and enough traction to double or triple that revenue quickly.

Series B (rounds not exceeding €3m):

1. Revenues have doubled or tripled since the A series. Customer retention is at its strongest.
2. It is clear to them that they can defend their product against competitors.
3. It is very likely that they will be acquired by others and make an EXIT and future investment decisions will be more financial in nature than anything else.

Stage according to private financing: