Learn all about the different startup stages and funding options for your small business with our handy guide.
Launching a startup business is an exciting time as you prepare to reveal a fresh product or service to the world.
You might be putting a new spin on an old classic or offering something entirely different. Either way, you’ll have plenty of startup stages to think about as you navigate the early days.
Learn more about your potential funding options and the common stages of a startup with this useful Adobe Express guide.
A startup is a brand-new business that’s only just finding its feet. It usually has an innovative product or service to sell that could improve or even shake up an existing industry. For example, a software firm with a groundbreaking social media app. Or a food supplier with a fresh take on deliveries.
Navigating the different stages of a startup can be tricky though, with lots of upfront costs to consider. Think materials and kit, marketing tools, record-keeping, brand-building, and workers’ salaries for starters.
As a result, startup founders often aim for quick growth to boost production, forge an identity, and push their business to the next level.
Even the brightest startup ideas will struggle to get off the ground without adequate funding. As you put together a business plan, the likes of legal fees, insurance, equipment costs, research expenses, and technology could quickly add up.
These upfront costs may seem daunting at first. But there are lots of financing options and stages of startup funding to consider. For example:
Each startup will have different ambitions, growth targets, and timelines. But they’ll often follow a similar journey when it comes to funding. Here are 6 stages of a startup to keep in mind.
At this stage, an entrepreneur is simply laying down the foundations for their business. It’s where they can nail down the purpose of their startup and the target audience, plus any unique selling points (USPs) they have.
As a startup founder, you can consider a range of funding sources during this phase. For example, personal savings or support from your loved ones.
You could also research crowdfunding. This involves raising small sums from lots of different people through a specialist online platform.
This funding stage is all about getting your product or service off the ground. For example, it might cover the launch of a new product, initial marketing efforts, hiring staff, and conducting competitive market research.
You can test out your ideas, check you’re moving in the right direction, and refine your strategy if necessary.
Angel investors are a common funding option at the seed stage. These individuals put money into a company in exchange for an equity stake.
Venture capitalists are another potential option. These private equity investors look for startups with strong growth prospects. Again, they’ll usually take an equity stake in return for their cash injection.
This phase is about optimising your company following the initial startup funding stages. It can give you the room to flesh out your business and truly bring your ideas to life.
After launching a successful product, now is the time to develop things further and create a plan for sustainable growth.
Series A is the first large-scale funding round that a startup completes. It usually involves venture capital firms.
Along with a viable product, investors will be keen to see a realistic vision for growth.
By this point, you’ll hopefully have proven your credentials with a successful product, steady stream of revenue, and a solid customer base. So, it’s all about scaling your company even further.
Series B funding can help you to extend your reach into additional markets, boost your market share, and increase your headcount with more specialist roles.
Venture capital firms are again likely to be a key source of funding during this phase.
Depending on your business, you may not need to go through the more advanced startup stages. For example, Series C funding rounds tend to be for well-established firms that are keen to grow into much bigger businesses – and potentially expand internationally.
This type of funding might help you to tap new markets, expand your products and services, or even to acquire other firms.
Venture capitalists, private equity groups, and sovereign wealth funds could all get involved at this funding stage.
During this final funding phase, you may decide to exit your business and give up control. You could do this through an:
A startup’s sale or IPO price is usually based on its valuation. By selling their shares in the business, an entrepreneur can effectively cash in all the time and effort they’ve put into it.
Whether you’re in the early stages of setting up your startup, or you’re ready to take your business to the next level, Adobe Express can help. You can use our free tools to:
In successful businesses, the early stages of a startup are usually followed by a period of growth and expansion.
You may choose to seek further investment in a Series A or B funding round. This could help you to branch out into different markets, raise your profile, and allow you to create new operations or departments.
This may depend on factors like your business type, growth potential, and the specific startup funding stages you choose.
For example, requesting money from friends and family at the pre-seed stage may only take a matter of days, depending on their cashflow and willingness to lend.
At the other end of the scale, acquisitions and IPOs could take months or even years, as a result of regulatory checks and due diligence.
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