What is a round of funding or investment?

When an entrepreneur or team of entrepreneurs creates a company, they must not only take into account the quality of their business idea, nor the team they have to develop it, it is also very important that you think about the funding needed to make this project develop, grow and scale.A funding round is a process that allows companies to raise new capital through investors. During the process, new partners join the company and acquire a part of the company's share capital. Thanks to external investment, the company achieves an amount of money to develop its business, and can grow faster than it would grow if it were financed solely by the results of its business. Funding rounds are one of the main alternatives that many entrepreneurs turn to given the increasing difficulty in accessing bank funding. It is important to keep in mind that while the objective of entrepreneurs will be to obtain the necessary funding to develop and grow their project, avoiding a dilution excessive that implies the loss of control over their own company, the objective of investors will be to maximize the return on invested capital. At Intelectium, we advise entrepreneurs not to rush, investing time in choosing the right investor is important, given that in the future it will become part of the company's decision-making.What types of funding rounds are there? Pre-Seed, Seed or Capital Seed RoundsThe first rounds of investment that entrepreneurs go to are called pre-seed, seed or seed capital rounds. These first rounds of funding usually begin, with the round of FFF's (Family, Fools and Friends), rounds financed by family, friends or even through the savings of the founders. In these investment rounds, money is generally invested in the development of the product or service, in the business structure and in market research, among others. As soon as enough money is obtained for the main needs, entrepreneurs can access other rounds of funding. Accelerators, incubators and Business Angels contribute training, capital and visibility to projects yet to be formed, so it is common for entrepreneurs to come to them in their earliest stages and, therefore, to be other agents to which to resort in this type of round. The capital they provide is intended to start the business and for the creation or improvement of the MVP.Pre Series A and Series A Rounds The pre-Series A and Series A rounds are more advanced investment rounds than the seed rounds, and, therefore, the investment size sought is higher. In this phase, startups begin to generate income and have already found the desired business model. The hiring of employees and expanding the consumer base are two of the main objectives that companies have at that time and therefore they are looking for an investment round starting at half a million in order to finance it and grow faster. Normally, in this type of investment round, capital ranging from 500,000 to 5 million euros is sought.B Series Series B is usually the investment round that the startup seeks when it is in the expansion phase. The fundamental objectives in this phase are focused on increasing the value of the company and revenues, as well as on product development. Scaling the business model and expanding is necessary to keep the company in this round. The average investment requested in this series is between 5 and 20 million euros.C Series In this investment round, the company takes a big step. The company is already consolidated and the objective is to obtain liquidity for the development and dissemination of new products, or even for the IPO. In these rounds, investment funds are more mature, sometimes they even access investment banks. These last rounds are very important, they can lead the company to success or failure. In these phases, it is essential to unite the team to examine all the decisions that are made.From Intelectium we hope that the article was useful to learn what a funding round is. It is important to note that there is no single formula for success, each one of them has its peculiarities, but with perseverance you will be able to finance your startup successfully.From Intelectium we had the opportunity to talk to Iñigo Juantegui, CEO & Co-founder of Ontruck, one of the most important logistics technology startups in Spain, about the process of Raise funding rounds that allow companies to accelerate their growth and development. At Intelectium we have 15 years of experience in the sector and we are specialists in developing business plans for the launch and scaling of technological startups. Our team thoroughly examines the technical, commercial and, above all, financial viability of each business idea. In this regard, we design the best financing strategies and the most optimized capital structures for each startup, from rounds involving only Business Angels to much more complex operations involving national and international venture capital funds (VCs). Contact us through the forms web for more information.