Question

1. Venture capitalists often will describe long-term financing stages of a company using an “alphabet soup” of terminology. For example, Series A financing, etc.

What are the four stages of investment in this alphabet soup, and what do they represent?

Answer 1

The four stages of investment are Series A, Series B, Series C and Series D.

Series A

It is the first venture capital round. It succeeds the seed round. This series is only done after a working product is demonstrated, an initial user base is established, and some revenues are generated. The initial team and product are established before this stage.

Series B

This stage is for scaling the business to the next level by increasing the user base, hiring more employees, and expanding functions such as advertising, tech and support.

Series C

This is the first of the later-stage venture capital rounds. This precedes the IPO, and can be extended in to Series D, E or F. This is done after the Series B targets of users/revenues are met.

Series D

This is an extension of the Series C round, and may be extended into further rounds to prepare the firm for further growth and maturity before the firm goes public.