Women Entrepreneurs 101: Investment Stages

Funding
Funding

Fellow women entrepreneurs, do you have a hard time understanding all the terms investors use? Words like angel investors, seed round are standard terms used in the investing world and you should familiarize yourself with them even if you are not looking for investments at this point.

Let’s start with the investment stages, which are typical stages of business you will go through when trying to raise capital. The amounts stated below are just approximate figures based on some of the cases in Singapore, the values of each round can vary from country to country.

1. Friends and Family
2. Angel Round
3. Seed Round
4. Series A
5. Series B
6. Series C

Friends and Family
For most initial investments, we usually try to tap on friends and family for capital. In some cases, they can be grants from parents, structured as loans or even shares in the company. Having shares in the company usually means they are sleeping partners with little input in the operations of the business.

Angel Round (<$500k)
You may also opt to skip the friends and family option and go straight to angel round. Angel investors are typically private investors who like your story and will invest capital for shares in the company. It is important to note that they are generally one of the most expensive funding options as your it is very early in your business and they could be taking a significant ownership (anywhere from 10% to 40%).

Seed Round ($500k to $1mil)
Once you have a prototype of your product/software/app, you will generally go around to venture capitalists to raise what they call a seed round. Usually the seed money is to test the viability of product/service and also further develop it.

Series A ($1mil to $10mil)
Typical Series A ranges are very wide from $1mil to as large as $10mil raised by iCarsClub, the biggest Series A in Singapore. By Series A, you should have significant traction in number of users and/or visitors to your site. It will be even better if your business is profitable by then or at least making some revenue so you are using the capital to scale up the business.

Series B,C (Varies)
After Series A, the later stages are B and C. At this point, the amounts raised and valuations vary wildly depending on the scale of the business.

So that’s a summary of typical investment stages you will go through. Although venture capitalists are more likely to invest in technology startups like apps, websites, biotech etc. as compared to traditional businesses. There are also other types of investors, for example incubators.

For traditional businesses such as retail, the friends and family, angel investors still apply but beyond that you will be looking at other types of investors, for example, private equity investors which we will discuss next time.

Have any questions or remarks? Feel free to drop us a comment!

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