Glossary - Funding Round
A funding round refers to a specific phase in the process of raising capital for a startup or early-stage company. During a funding round, investors provide financing to the company in exchange for equity, convertible debt, or other financial instruments. These rounds are typically categorized by the development stage of the company, from initial seed capital to later-stage investments.
Also known as
- Capital Raising
- Financing Round
Use cases examples
- Term Sheet: The Series A funding round terms include a $5M investment for 20% ownership in the company.
- Investor Presentation: During our last funding round, we successfully raised $2M from angel investors to accelerate product development.
Considerations for investors
- Assessing the company's valuation and growth potential - investors need to evaluate if the company's projected growth justifies the investment and the associated risks.
- Due diligence - thorough evaluation of the company's business model, market potential, team, and legal standings is necessary before committing to invest.
Considerations for founders
- Evaluating the dilution of existing equity shares - founders should consider how much of their company they are willing to give up in exchange for funding.
- Understanding the terms and conditions - it's crucial for founders to comprehend all conditions tied to the funding, such as milestones, governance rights, and liquidation preferences.
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