Why There are Different Series in Startup Funding and What’s the Differences

When startups raise money, a founder and a co-founder have to contact different investors, show their talents to attract investments. Usually we heard about several terms like seed round, Series A,B,C. What does they mean in startup funding process? In one word, the company receives money from venture funds that focus on specific growth points at specific sizes. Let’s explain a little more about them below:

Seed round

This is usually a small amount of money (Generally USD 70,000 to 150,000) given to a person or a team to give it the momentum it needs to turn its initial idea to product. Normally, they will have a concept and will know that it has potential viability on the market, but they won’t have a working prototype yet. Investment orgonizations hardly involve this round, but individual angel and incubator foundation focuses on this part.

Series A

When a product have sufficient data and the business model has been verified preliminary, they can seek funding from a venture capital group. The series A funding will be larger than the seed round (usually between USD 3,000,000 to 5,000,000). Most of the venture capitals in market are focused on this area. Startups typically use series A funding to figure out the best business model for their company.

Series B

By the time their business model is relatively mature ,have enough data, and have sustained revenue, they can seek series B funding (usually between USD 7,000,000 to 15,000,000) to bring their product to a broader market. Such companies are generally the leading companies inside the subdivided areas - similar model. Rich VCs tend to be involved at this stage.

Series C and D

This is the stage that companies spend money on fast expansion and competing with the other competitors. In the same subdivision of the same model, it is generally impossible to have a third company receiving series C funding. Series C and D are usually hundreds of millions of USD. In fact, in addition to some major investment organizations, most of VC did not have enough money to invest. At this stage,  strategic investors started to become active, in China mainly BAT and other large listed companies.

For how to reach investors in China, you can read my article here: https://wtoipglobal.blogspot.jp/2017/11/how-startup-companies-reach-investors.html

WTOIP is the world’s leading entrepreneurial resource-sharing platform with a focus on IP, helping foreign tech startups to start business in China. Services include business matchmaking between foreign tech startups and local top enterprises to help them find investors in their field. If you want to expand the China market, just contact us.