Buzzword Buster – Funding Rounds

A general term applied to the stages start-ups go through to gain investment from venture capital firms. After obtaining seed capital, funding rounds are usually structured into a few chunks, sometimes called series. E.g series A funding.

When start-ups go through funding rounds they are trading capital in their business for money to help them run and grow the business and further develop products and prototypes.

Unfortunately for many start-ups, there can be a tipping point where they have taken on lots of venture capital funding but not yet grown the business to a size where a sale or significant profit are available to repay investors.

This is often caused by speculative over valuations of firms. Further VC investment at this point can be seen as a sign of faith from investors although it can also be a way of VCs saving face or the last hopeful punt on a doomed enterprise.

 

Disagree or want to add something? What do Funding Rounds mean to you?

 

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