Difference between Series A and Seed Funding
As an upcoming entrepreneur, finding an investor and securing your initial funding may seem like a burdensome task. You may come across many terms like seed funding, angel investment, venture capital, series A, B, and C funding. To make a better understanding of these basic terminologies we FirstFunding are here to help you understand two basic terms i.e., Seed Funding and Series A Funding:
Seed funding, also known as Seed capital, is the first official equity funding stage or the first initial capital raised by a startup. These initial funds help out to cover their startup costs like research, marketing, and business proposal. These investments are generally made by close friends, family, acquaintances, or by the owner themselves.
Series A Funding
Series A or Round A funding refers to the first round of venture money a startup has raised after angel or seed investors. It is an investment made after a startup has shown progress in building its business model and demonstrated its growth and generated revenue.
Seed Funding Vs Series A Funding
Startup funding comes through a series of rounds. The Seed and Series A rounds are two of the most notable and crucial for startups.
Seed funding is the first round of raising venture capital in a startup whereas Series A funding is considered the second round of venture capital that newly formed companies attempt to achieve.
A seed round usually takes place before a product has been completed, while a series A round happens after traction is clear. Series A funding is usually much larger than seed funding.
In the seed round, startups put their focus on researching their data and reports on the trends in the market. While in, series A, they are focusing more on historical data, accomplishments, and the milestones they have added.
In the seed round, 15 or fewer investors seed accompany with funds with $50k – $2 Million. This money is generally used to support initial market research and early product development. On the other hand, Series A funding refers to a smaller number of angel investors or Venture capitalists who contribute on an average between $2-10 million. This fund is named after the type of equity investors hope to eventually receive i.e., the first group of investors to receive preferred shares.
The seed round usually takes 18-24 months before Series A funding. After you have successfully crossed the seed round, Series A takes typically Five to six months for you to legally get your investor.
As you continue to expand and grow your business and go from one financing cycle to the next, don’t lose your momentum and learn before investing!