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Why early stage funding for startups is difficult?

Ayush Watnani
05 Oct 2019
New Update
Why early stage funding for startups is difficult?

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.