20.1 -- VENTURE CAPITAL & FINANCE ROUNDS

Start-Up Stage is consistent of what?

Series A or B

Late-Stage Round is consistent of what?

Series C or D

Seed Money Stage goal: What do seed investors get in return?

adapts the product on the market to see if product is viable. commonly from angel investing. seed investors may receive equity directly.

Financing in seed money stage is often by...

advisory shares or convertible notes

Which type of financing covers IPO expenses and is often provided by an investment bank?

bridge financing

do Stages of Financing have to be in direct order?

no, each stage can be longer, shorter, or not exist at all. but, it is the general framework for what usually happens. Facebook didn't go through this.

crowdfunding

raising small amounts of capital from a large number of people, usually through the internet ex) kickstarter, GoFundMe

3 Stages of Financing

seed money stage (initial investment) start-up stage late-stage rounds

Angels in Angel Investing

tend to focus on smaller deals while investing their own money into ventures usually friends and family

advisory shares encourages what?

vested over time, encourages angel investors to stay involved.

underwriter definition & job

a financial expert assesses finances and risk while employed under an investment bank. often work with initial public offerings

Initial Public Offerings (IPO) definition: who are they offered by?

The first time that the stock of a private company is offered to the public —IPOs are often issued by smaller, younger companies seeking capital to expand, but they can also be done by large privately owned companies looking to become publicly traded

Initial Coin Offering

company sells "tokens" that grant the owner the right of use to the company's service in the future, or as a novelty. ex. tickets to use metro.

Series A fundraising -- covers what? what is it preferred in? how many companies make it past it?

covers salaries, market research, product finalization. preferred in stock. <10% of companies make it past this stage.

Working Without an Underwriter gives you three options:

direct listing crowdfunding initial coin offering

3 Common Venture Capital Characteristics:

financial intermediaries that raise funds from outside investors to create limited partnerships. actively overseeing, advising, and monitoring invested companies (join board of directors) generally, don't want to own investment forever. they look to sell. [limited partnership, active board member, look to sell]

Venture Capital definition

financing for new, often high-risk, ventures

what is a common form of VC in the later stage of a company's growth?

growth equity

from lecture, explain.... first-round financing second-round financing third-round financing fourth-round financing

ignites growth after lack of Series A funding bridges gap for organization near or at breaking even, so need more funds for progression (IPO) bridge financing

Series B fundraising -- does what? what is the goal? what is it preferred in?

ignites growth in the company when they have a product on the market. goal is to generate net profit. common stock is popular to use.

underlying sources of funds examples:

individuals pension funds insurance co. large corporations universities

growth equity definition

investment opportunities for mature companies going through transformational events, meant for dramatic growth.

private equity meaning

labeling the rapidly growing area of equity financing for nonpublic companies

Late Stage Rounds -- are for who? what is it used for? what does it set the company up for?

the few companies that need more than Series B. can be used to grab greater market share, fund acquisitions, or develop more products. sets the company up to be acquired or go public.

bridge financing definition

the interim financing between organization's short-term and long-term financing.

direct listing definition

the issuing firm work directly with exchange to avoid the 70% commission of an underwriter. not common.