Why early stage funding for startups is difficult?

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Like all, you want to have detected that the startup trade is flourishing like never before. With large deals, larger exits, and greater funds are making a splash in Startup World.

But hang on lets 1st perceive what’s early-stage funding?

Early-stage investing funds the primary 3 stages of a company’s development. it’s divided into 3 distinct funding types:

  • Seed funding (seed capital)—money provided to assist an entrepreneur to begin a business.
  • Start-up funding—money used to facilitate a corporation develop product and begin selling those products.
  • Early-growth funding—money to assist establish and boost producing and sales.

But what makes the early-stage funding so difficult for new startups?

Early investors recognize that developing new business demands time and in-progress support, in order that they generally expect to form multiple investments in an exceedingly single company because it develops.

Because there’s a lot of uncertainty related to new firms that don’t yet have a hold within the marketplace, not all investors prefer to place cash into them. once a start-up company matures and becomes a developed-stage company it will obtain funding from massive VC or massive investors.

However keeping aside $1billion figures, it is important to grasp the true heart of the VC industry: Early-stage and growth-stage funding. we want to remind ourselves bigger isn’t always better – at least in the long term.

 

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