Investment stages represent a way for start-up companies to obtain financing. It is crucial to highlight that, regardless of the size or sector in which a startup operates, the granting of financial resources is what sustains its operations and innovation initiatives.
Therefore, these resources are not limited to just the financial aspects. Depending on the stage of evolution of the enterprise, human capital may have an even more significant value than financial capital.
Navigating the development stages
In the entrepreneurial world, the path to success is often paved with strategic investments. For startups and scale-ups, there are several sources of funding that can boost growth and ensure business sustainability.
Bootstrapping e Friends, Family and Fools
The preliminary stage, called the ideation phase, involves entrepreneurs outlining the operational plan and goals for the startup’s product or service. During this stage, it is common for investors to be the founders themselves, as well as their close circles of friends and family. This financing model, referred to as bootstrapping, provides startups with the opportunity to begin their journey and validate their initial conceptions.
This strategy allows entrepreneurs to begin developing and launching their products or services without requiring support from external investors. Furthermore, the approach known as FFF (Friends, Family and Fools) consists of seeking investment among close individuals who share the vision and define the entrepreneur’s ability.
The practice of obtaining investment for startups through family, friends and colleagues is more common than one might think. Facebook is an example of this. In 2004, Mark Zuckerberg’s parents purchased servers when no professional investors were willing to contribute money to the project.
Business Angels
The practice of obtaining investment for startups through family, friends and colleagues is more common than one might think. Facebook is an example of this. In 2004, Mark Zuckerberg’s parents purchased servers when no professional investors were willing to contribute money to the project.
Angel investors, also known as Business Angels, are people with high financial capacity who direct their own resources to early-stage startups. In addition to funding, Business Angels often provide strategic guidance, sector knowledge and access to their networks. They are attracted by the opportunity to back promising ventures and reap substantial returns from the successful growth of these startups.
Many angel investors go above and beyond with their monetary contributions. They have a desire to engage in the venture and share their vast experience, playing the role of genuine mentors. When you are looking for angel investors for your startup, it is advisable to focus on those who have knowledge in your area of expertise. This is because in addition to helping the business progress, it can provide access to the market and have the ability to evaluate your investment proposal in more depth.
Seed Capital
Seed capital is intended for startups that are ready to expand their operations. The distinction in relation to investment is that financing can reach more substantial amounts and is provided by investors acting as legal entities.
The sequence of angel investment, seed investment and venture capital is a learning segmentation, considering that some investment phases can be omitted, depending on the startup’s revenue and growth rate. It is an approach that requires careful analysis on the part of the founders: deciding between achieving attraction as quickly as possible or maintaining greater control over the company’s shares until obtaining investments of greater magnitude.
Venture Capital
Venture capital funds, known as Venture Capital, are mainly made up of large corporations, banking institutions or specialized investors. These funds target small or medium-sized emerging companies, but with considerable revenue and growth potential.
Although the operation may be modest, the company must have a validated product and have already captured a share of the market. Investments are usually in the million range and it is common for several funding rounds to occur, indicated as series A, series B, series C and so on.
After receiving investments from Venture Capital funds, the subsequent steps in the entrepreneurial trajectory include the exploration of Private Equity funds, which become relevant when the company stops being a startup and develops into a consolidated enterprise with solid foundations and significant results.
And your startup, what types of investments are you looking for?
Count on someone who understands the subject
To put a solution of this magnitude into practice it is necessary to be well advised and prepared. 3Capital is here to help you and boost your business.
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