Stages of a Startup: Ideation to Exit
Watch Part 0 of this series here: • Stages of a Startup: Ideation to Exit
Watch Part 1 of this series here: • What Are the Stages of a Pre-Seed Sta...
In this video, we explain different stages of a startup; from idea stage to seed and then growth and finally exit stage.
0:00 Intro
2:21 Ideation Stage
3:44 Validation Stage
5:30 Pre-Series A
6:14 Growth Stage
8:53 Scaling Stage
9:54 Exit Stage
Different stages of a startup can be grouped in following way:
Idea Stage: Pre-seed Round - The very first round when a startup raises funding is called Pre-seed round, and this is basically the idea stage for a startup. Here founders test their hypothesis by doing market research. This process is known as Hypotheses Validation. Since the idea is still not tested, it's difficult to raise funding from external investors and that's why most common pre-seed funding sources are self-financing, friends and family and business pitching events.
Early Stage: Seed Round - As the name suggests, Seed round is like planting a seed. It means you have tested the idea and found the product market fit and now you need to move towards building an MVP (minimum viable product). Seed funding enables the founders to conduct market tests, onboard mentors, and build a founding team. Other common sources at this stage are incubators, accelerators, angel investors, and crowdfunding platforms.
Growth Stage: Series A Round - By this stage, a startup has launched their product or service in the market and are ready to scale. Startups raise their series A round to do that and Investors financing at this stage give importance to key performance indicators like customer base, revenue figures, and app downloads, among others. The Series A stage also marks the beginning of venture capital (VC) financing.
Series B, C and D rounds: By this stage, startup is growing fast and now the focus is basically expansion. Startups burn a lot of money in marketing at this stage and that's why raise new series of funding rounds. And since you have already raised multiple rounds of funding, the risk factor significantly decreases and now new avenues of funding become available. Family Offices, Private Equity Firm and Investment Banks to name a few. And now that you are a stable company, you also have an option to take a loan; where you don’t have to give any equity and you can just return the money with some interest in the future.
Exit stage: After the growth stage comes the maturity stage. As a founder you have spent years building a startup into a big company and now you have several options in front of you; do an IPO, merge with or acquire other companies or buyback shares. In a different scenario, a founder wants to continue to run his startup and he wants to regain control of the startup, in which case he can buy back shares of his own company from other investors, and give them exit.
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