Start Up Phases

Stage 1: Pre-Seed

  • Funding Purpose: Validate the idea, build the MVP, and experiment to find product-market fit.

  • Correlated Growth Stage: Wilderness Period

    • You’re navigating uncertainty, trying to figure out if there’s demand for your idea.

  • Funding Sources:

    • Personal savings, friends & family, angel investors.

    • Pre-seed funds and incubators.

  • Key Metrics:

    • MVP completion.

    • Early user feedback.

Stage 2: Seed Stage

  • Funding Purpose: Prove product-market fit and acquire initial customers.

  • Correlated Growth Stages: Wilderness Period → Penny Gap

    • You’re focused on acquiring paying customers and solving the penny gap.

  • Funding Sources:

    • Angel investors, early-stage venture capital funds, crowdfunding.

  • Key Metrics:

    • Early customer adoption.

    • Positive user feedback.

    • Revenue or strong user engagement metrics.

Stage 3: Series A

  • Funding Purpose: Scale your customer base, refine the product, and begin building scalable processes.

  • Correlated Growth Stages: Penny Gap → Dollar Gap → Crossing the Chasm

    • Overcome the dollar gap and appeal to a broader market beyond early adopters.

  • Funding Sources:

    • Venture capital (VC) firms focusing on Series A investments.

  • Key Metrics:

    • Revenue growth.

    • Consistent customer acquisition.

    • Proof of a scalable go-to-market (GTM) strategy.

Stage 4: Series B

  • Funding Purpose: Scale operations, hire aggressively, and optimize growth.

  • Correlated Growth Stage: Scale Stage

    • Rapid expansion, building teams, and refining business processes to support growth.

  • Funding Sources:

    • Growth-stage venture capital firms.

    • Corporate venture arms.

  • Key Metrics:

    • High customer retention (low churn).

    • Accelerating revenue.

    • Repeatable sales and marketing processes.

Stage 5: Series C and Beyond

  • Funding Purpose: Enter new markets, build defensibility, or launch additional products.

  • Correlated Growth Stages: Scale Stage → Escape Velocity

    • You’re achieving escape velocity and working to dominate your market while fending off competitors.

  • Funding Sources:

    • Late-stage venture capital firms, private equity, hedge funds, corporate investors.

  • Key Metrics:

    • Significant market share.

    • Strong brand presence.

    • Proven profitability or a clear path to profitability.

Stage 6: Pre-IPO

  • Funding Purpose: Prepare for a public offering or acquisition by strengthening financials and scaling further.

  • Correlated Growth Stages: Escape Velocity → Moat-Building Stage

    • You’re focusing on defensibility, operational efficiency, and growth.

  • Funding Sources:

    • Private equity, institutional investors, secondary markets.

  • Key Metrics:

    • Solid financial performance.

    • Clear market leadership.

    • Positive EBITDA (or a credible path to it).

Stage 7: IPO/Acquisition

  • Funding Purpose: Public markets or strategic buyers provide capital to fuel future growth and/or provide liquidity for early investors.

  • Correlated Growth Stages: IPO/Exit Stage

    • You’ve achieved significant growth and scalability, making the company attractive to public markets or acquirers.

  • Funding Sources:

    • Stock market (IPO) or corporate buyers (acquisition).

  • Key Metrics:

    • Profitability or strong revenue growth.

    • Dominance in your niche or industry.

Stage 7: Post-IPO/Exit

  • Funding Purpose: Capital is reinvested into innovation and expansion.

  • Correlated Growth Stages: Post-Exit Evolution

    • Focus shifts to sustaining growth, maintaining competitive advantage, and exploring new revenue streams.

  • Funding Sources:

    • Revenue generation, reinvestment of profits, potential debt instruments.

  • Key Metrics:

    • Continued innovation.

    • Market share defense.

    • Consistent earnings reports.