Investment round: what it is and what it means if it is Series A, B, C or D

Investment round and what Series A, B, C or D mean. The Finnovating platform is here to tell you everything you need to know about them, a form of financing that is key for many companies.

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What is an investment round?

An investment round is a form of financing that some companies, mostly technology companies, use to access capital. The rounds, also called financing series, are very important for companies because they allow them to use the money they receive to consolidate, grow and expand.

In turn, they are a very important stimulus that can even allow the creation of new technologies.

Who provides the financing?

Generally, the money awarded in the different investment rounds comes from venture capital firms, angel investors, accelerators, among others. In exchange for providing money, these investors become part of the company or enterprise in question, thus becoming their partners/shareholders. The objective of these investors is for the company to grow to, at a minimum, recover the capital invested.

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How are investment rounds classified?

The investment rounds are defined by categories, which correspond to a particular stage of maturation of the company. That is, they correspond to what moment of their life as a company or entrepreneurship they are.

Seed round

It is the first stage of financing is called seed capital. It usually comes from the savings of the founders or from the financing of friends, friends and family. It can also happen that an angel investor gets involved from this stage and supports the project with his money. It can be said that the seed round is the one that transforms an idea into the start of a business.

Series A

In this round, the amount of silver that the company will receive is greater than in the seed round. The money is generally used to hire employees and start generating more income.

This round of investment helps to consolidate the business model, since the company already has a much more consolidated business strategy. The figures for this type of series range, in most cases, from 1 to 15 million dollars.

Series B

In this round the objective is already to increase the value of the company and the income obtained. It can be said that at this stage the business or company begins to expand.

In this round, potential investors analyze the evolution of the company, what its market share is and what advantages it has over its competitors. The figures for this type of series generally range from 15 to 50 million dollars.

Series C

In this round, the company already works in a consolidated way. The objective is to obtain more money for the development of new products, acquisitions or even to start preparing what could be the listing on the Stock Exchange.

In this stage, investors are looking for the company to develop new business units and consolidate itself as a benchmark in its sector. By now, the company has already matured.

The figures for this investment round are generally $50 million and up.

Series D

The objective of this round is a strong expansion and improvement in the structure of the company. It seeks to enhance the results to a great extent. The company achieves massiveness and advertising budgets are increased.

Series E, F, G, etc:

As the company grows and continues to seek money to finance itself, new rounds may occur. With the capital raised, it will seek to achieve increasingly ambitious goals. Companies stop having investment rounds when they go public with an Initial Public Offering (IPO). Also, when they are bought by another company.

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