Startup companies generally have two unique characteristics: first, they cannot raise funds in the loan market and public securities market; second, their development is staged. At each stage, there are obvious differences in enterprise size, capital requirements, investment risks, etc., so different financing methods are required.
1. Seed stage
Financing methods: special government appropriations, social donations and venture capital investment
It is in the product development stage and produces laboratory results and samples. and patents, not products. The investment success rate at this stage is the lowest, but the individual capital requirements are the least, and the profit after success is the highest.
2. Creation period
Financing method: venture capital
The company already has a product in its early stages and has a very rough operation Plan, an incomplete management team. Compared with the seed stage, technical risks have dropped significantly, but the investment success rate is still low
3. Growth stage
Financing method: venture capital
Technical risk has dropped significantly. The product or service has entered the development stage and has been tried by a limited number of customers. Expenses are increasing, but there is still no sales revenue. By the end of this stage, the company has finalized its product and begun to implement its market development plan.
4. Expansion period
Financing methods: venture capital, private equity, preferred shares, etc.
The company’s production, sales, and services are already sure of success. Enterprises may want to set up their own sales team, expand production lines, enhance their research and development potential, further expand the market, or expand their production capabilities or service capabilities.
5. Profit period
Financing method: Issuing stocks and listing them
When the company's sales revenue is higher than its expenses, net income is generated, and venture capitalists begin to consider withdrawing. On the one hand, the funds obtained from a successful listing add stamina to the development of the enterprise and broaden the scope and scale of operations. On the other hand, it also creates conditions for the withdrawal of entrepreneurial capitalists.