Phases of venture capital investment-diepresse.com

An overview of the various phases and financing rounds of venture capital investments:

Pre-Seed phase

• Purpose: Financing of first research, product ideas or concept validation.
• Investors: founder, family and friends, fishing investors, pre-seed vcs.
• Use: market analysis, development of a prototype, building a basist team.
• Risk: Very high – no product or customers yet.

Seed phase

• Purpose: Validation of the market and development of a minimum product (MVP).
• Investors: Angel investors, Seed-oriented VC funds, early VC companies.
• Use: product development, first marketing activities, first employees.
• Milestones: MVP finished, first customers or user feedback.

Early phase (Series A and B)

Series A:

• Purpose: scaling the product and expanding the market position.
• Investors: Institutional VC companies.
• Use: team structure, customer acquisition, product improvement.
• Milestones: product market fit, growing customer base.

Series B:

• Purpose: expand the market presence, scale business model.
• Investors: larger VC companies, strategic investors.
• Use: business development, infrastructure, sales.

Growth phase (Series C and beyond)

Series C+:

• Purpose: expansion into new markets, product diversification or preparation for exit.
• Investors: late phase VCS, private equity companies, hedge funds, corporations.
• Use: international expansion, takeovers, operational scaling.
• Milestones: strong sales, market leadership, established business model.

Exit phase

• IPO (IPO): Company goes to the stock exchange.
• Takeover: sale to another company.
• Secondary sales: shares are sold to other investors.

The most important thing shortly

Venture capital investments are divided into phases: from the pre-seed and seed phase for ideas and product development, via Series A/B for scaling and market tetration, up to the growth phase (from Series C) for expansion. In the end, the exit is due to the IPO, sales or share transfer.

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Michael Hirt is a management expert and consultant, executive coach, keynote speaker and book author. Hirt helps executives for exceptional performance and results increase, with a high impact on the success of your company. He studied in Austria, the USA (Harvard LPSF) and France (INSEAD MBA) and works worldwide.