Series A Funding
What is a Series A fund raise about?
Series A Funding is the initial fundraising round for a company. It is basically the second stage of the capital raising process for a startup and the first stage of venture capital financing. Series A financing is primarily required in order to ensure the continuous growth of your company. The goal in series A funding includes reaching milestones in product development, covering up the salaries of the people involved, finalization of product/ service to be introduced in the market and attracting new talent.
Series A Funding or Series A round funding is the initial fundraising round for a company. It is the second stage of the capital raising process for a startup and the first stage of venture capital financing. It is a significant milestone for a startup as it proves that the startup has demonstrated a viable business model and has reached product-market fit. Series A financing is primarily needed when a startup needs additional capital to fund its growth.
How to obtain Series A funding for a startup?
In competitive market places, there has been a massive growth in the number of startups leading to a fierce competition in gaining investors. Here are some key points that you must know before pitching your idea to the potential investor in order to obtain Series A funding for your startup.
- Firstly, a startup has to paint an attractive/appealing story about their businesss in the best light to investors. Investors usually look for a strong, well-planned strategy and a possible exorbitant execution.
- Assess the value of your business. Assessment of the value includes several key characteristics of your company.
- In order to persuade investors to put funds for your company, it is important for you to have a clear idea of the correct valuation of your company.
- Also, make sure that you can support your valuation if questioned by potential investors. By doing this, you protect yourself against certain risks.
- Lastly, and most importantly, doing some research about how much financing is typical in Series A funding in your sector and industry is an essential thing to do. This will make sure that you ask for the right amount from potential investors
Why Would You Need Funding from a Venture Capitalist?
As your startup begins to thrive, additional capital might be needed to grow the company. VCs offer capital in the form of funds for new and young companies to grow at various stages of their development. VCs may also help make financial choices in your best interests that will influence your startup’s growth positively. Besides, a VC will help to provide a valuation on the company by estimating the amount of money a business is worth. They would also extensively discuss and come to a mutually-beneficial decision on the ways in which the investors will share in the company’s profit. Essentially, VCs act as a partner in hand to guide you to attain your business goals from the idea that you created but may not have the necessary resources to achieve tangible success with it.
Also, VC will help your startup in the middle stage of growth. Plus, they offer financial help later so that your company can publicly trade its stock. Unlike any traditional funding, VC’s will always assume risks. Thus, they find private investors to back your company when the business may not be making any profit. So, you will need a VC to quickly grow your business idea into a working company.
Why is obtaining a Series A funding a significant milestone for a startup?
Obtaining Series A funding is considered as a significant milestone for a startup because it is typically the first external fundraise for many companies. It focuses on the growth of the company by bringing in a significant investment. Series A funding is the first equity financing that the startups raise. Most of the companies before the stage A funding are on a shaky ground which becomes stable upon obtaining their Series A funding which allows them to bring their product/ service to a mass market and stabilize their company. Series A funding also enhances the ability of a startup to scale faster with larger partners and more cash
Who takes part in Series A funding round?
In Series A Funding, the biggest investors are generally established venture capital firms and private equity firms that have successful investment portfolios of startups they have invested in. Also, there can be more than one investor for each round.
How is Series A funding different from seed funding?
Seed round funding is aimed to supply startups with the capital that they need in order to build the foundation of a profitable business. It is at an earlier stage than Series A funding. In seed round funding, the investors are typically rewarded with convertible notes, equity or a preferred stock option in exchange for their investment. On the other hand, Series A funding prefer shares and the investors become the first group to receive preferred shares. At, the stage of Series A funding, the company is at a developed or pre-developed stage and the funds raised enables the company to expand and facilitate growth.
What is the average ticket size in Series A funding?
The average ticket size in Series A funding differs from one industry to another. Before pitching your idea to the investors, it is significant for you to have an idea about how much capital you would like to raise and how the proceeds will be used to fund your startup’s growth.
How does Series A fundraise go about?
Series A funding is simply about finding the right investors in the right space and pitching your idea to them in the best light possible. If an investor decides to invest in your startup, a due diligence process will then be carried out. The investor will look through the financial, legal and operating aspects of your startup to ensure all documents are verified. It is hence possible for a deal to fall midway through due to lapses or allegations
Examples of recent notable pre-Series A/Series A rounds in Singapore
Bayfront Capital Advisors have assisted Kind Kones in their SG$1M pre-Series A funding. Other notable rounds in Singapore are Endowus’s SG$23m in Series A funding, Morning’s US$1.27m in pre-Series A funding and Bolttech’s US$180m Series A funding
Is Series A right for your company?
Before you decide to pitch your idea to the investors, it is critical for you to know whether Series A funding is right for your company or not. It depends on various factors like dilution, position in the market etc. So, before you look for Series A funding investors, consider whether your company has good traction with its products in contrast with the recent Series A funded companies, what sets them apart from other companies, what will be the effect of your product/service on the market and whether you have a unique competitive advantage. If you do not find most of these answers to be a positive, you may also consider other forms of financing like venture debt, pre-Series A to extend your runway before you achieve the above traction. We, at Bayfront, provide you with extensive examples of Series A funding round for you to understand better.
What are the documents needed for Series A funding?
For a Series A round, documents required but not limited to are investment memorandum, past years financials, legal documents of your company. Bayfront Capital has helped other startups in raising capital and hence, we will ensure you are well prepared with the necessary documents needed. We will review and if needed, will assist in reconstruction of certain documents like fundraise decks, investment memorandum and teasers.
How can Bayfront help you in obtaining a Series A funding for your startup?
At Bayfront Capital Advisors, we leverage our extensive network of investors to find the right investors for your startup. With over 100 years of cumulative experience in banking, we know what investors are looking for and hence, we are able to conduct initial preparation to present a convincing story to investors. Some of the key work we are involved in are constructing a financial model to derive a valuation for your company, and the necessary due diligence to ensure a smoother fundraising process.
Get in touch with us today to understand more about our services and how we can help you.