BY ROBIN GHOSH
( FORMER CHIEF ECONOMIST, BENGAL CHAMBER OF COMMERCE AND INDUSTRY)
KOLKATA, 1 SEPTEMBER 2022
If you are a startup and looking for funds, you have to be familiar with Series AB and C funding. Series A funding in most cases is the first round of financing for a company, while B and C funding generally happens in a company’s later stages of development.
Series AB and C funding are private equity financing. This equity is not traded publicly in the stock market.
If you want to know the objective of series AB and C funding they are as follows:
1 .The goal of Series A funding is to help a start up grow and scale a business.
2.The goal of Series B funding is to help a startup continue to grow and move to the second level of business.
3.The Series C funding is the third round of private equity. The goal of Series C funding is to help startups to consolidate its position and prepare for an IPO.
The next question that comes to our mind is which type of fund is suitable for you?
Answering this question is not easy. Only an experienced financial planner can design the financial scheme required at various stages.
The core features of Series A funding, as explained earlier, is mainly to grow and scale up.
But Series B and C funding is little different. It is large in size and it is for keeping the company operations running smoothly and to execute the company’s growth and expansion plan.
Typically, Series B and C funding is provided by venture capitalists and it is used for hiring new employees, expanding into new markets and developing new products and services.
But what is important here is to note that the fund has to be judiciously used as this will be monitored by the investors.
Moreover, the startup has to continuously demonstrate a positive track record, possibility of good return on investment.
Essentially, in this stage, you have to generate confidence in the minds of investors so that there is no hurdle or barrier.
Series C funding is the last round of funding before a company goes public. This fund is provided by institutional investors like venture capitalists, investment banks. The investors are looking to get a return on their investment before the company goes public.
Each round of private equity investments or financing has different terms and conditions. So it is important to understand the implications and consequences of the terms and conditions before you
decide to obtain the fund.
No doubt it is a daunting task. But nevertheless, it is indeed manageable. You have to do little research and take help from the finance professionals.