What are the different stages or steps in venture capital financing?

What are the different stages or steps in venture capital financing?

As we all know that this is the “Startup” age, and when it comes to startups or rather whenever there are people around speaking about it then there is one word or term which is mentioned a lot of times that term is “Venture Capital”. Most of us do know something about this particular source or type of funding, after all, there is a famous documentary titled by the same name and briefing about the emergence of the term and the system of venture capital.

In short Venture capital is a type of funding process in which cash or investment from investors is lent to startups or emerging companies in a view of the company or the startup having the potential of long term and measured growth. It is a high risk but potentially highly rewarding investment.

Now, if you are reading this means you are interested to know more about the process of venture capital financing. If that is the case then, first of all, make it very clear that in general there are five stages of venture capital financing, but these may vary as per the different types of financing.

Following are the five general stages of venture capital financing            

Seed Stage: The first stage of venture capital financing is the seed stage, which is close to being just something more than an idea of a product or a service with substantial potential to become a successful business soon. This is more of a convincing stage for any entrepreneur where he or she needs to convince the investors with an assurance of a successful roadmap and a possible and beneficial business opportunity. 

Startup Stage: It is the stage in which companies complete their research and development along with making a proper business plan. This makes them ready to go to market and advertise their service or product to the target or potential customers. Most of the time in this stage the company is ready with a prototype or some firsthand experience reviews of the service or the product available. At this point of the stage, the business needs a large infusion of capital to sharpen their service and product, increase or hire new staff, complete the remaining research and finally get ready for the actual business launch.

First Stage: This stage is even referred to as an emerging stage for any business. It is a contemporary to the market launch of the company, as and when the company if officially to make it big on the profits chart. The funds received at this stage are generally used to increase the production capacity and the sales numbers as the marketing also take the required boost.

The Expansion Stage: This is the stage of exponential growth and is also referred to as the second or the third stage. The entrepreneurs need funding in this stage to keep pace with the rising demands. This is because the business is starting to see some significant growth in the niche of operation and hence needs to boost its operation.

The Bridge Stage: This stage is for the firms which have reached a level of maturity in their operations. The funding that companies receive or demand here is generally for mergers, IPOs or acquisitions. This stage is the complete transformation of a company into a fully grown business. Most of the time investors tend to sell their shares and their relation with the company at this stage to get a significant amount of returns on the investment made by them.             

Financial Assistance in Building Your Business

In each stage, all the entrepreneurs or business owners need someone to be there by their side to take care of the tricky financial calculations or keeping the account books up to the mark to keep everything transparent and clear. At the same time getting the valuation of the business right at every stage is also important to get proper private investment or finances anywhere in the world. In such instances, there are firms like RPD Financial Solutions Pvt. Ltd. Who can take care of all these tricky financial aspects and let you focus on the actual business.