In the previous post, ‘How many funding rounds does your startup need?’, had shown you all about how many stages in startup funding, what kind of investors could fit them, and how much fund startups get in each round. It could be clear but not enough for startups to get what they should do in each of these stages. This post will answer this question, yet in the early stage. An early-stage startup has 2 rounds of funding including pre-seed and seed:
PRE-SEED
What is Pre-seed?
Pre-seed round or bootstrapping round is the earliest stage of startup funding. In this stage, startups are almost like born babies that have an appearance but not stabling anything yet. That’s why the pre-seed stage startups are barely or incredibly difficult to get external capital.
What is the main goal of the pre-seed stage?
The answer is for turning a startup’s ideas into something tangible and laying the groundwork to get your offering into the market. The main funds are mostly from the founders’ money, their family, and friends. Sometimes, in the scarce case, they could get funds from angel investors who were inspired by their idea and wanted to help them bring it out to the market.
What should a startup do in the pre-seed stage?
There is no measuring the limited time at this stage. In fact, the viability is based on the startup’s abilities including the founder’s personal experiences, professional networks, and the nature of the company. Therefore, how to control your business’s base is the crucial target.
So, what should startups do?
- Building the business model
- Developing business concept
- Hiring a team
- Marketing and market testing
- Researching the market and competitors
- Getting the patents and copyright
- Preparing the product launch
- Creating a pitch deck
SEED
What is the seed stage?
This is considered the official fundraising stage. Startup founders need to know about raising the seed funds critical to getting their company off the ground.
What is the main purpose of a seed round?
After preparing all in the pre-seed stage, now not only has your team collected rich experience in running a business and product, but your company has the potential to be vibrant. In the next step, you need more funds to run your project and develop it wider and demonstrate to VCs that your idea is a viable investment opportunity. That’s why you need a seed stage on the goal to prove that you are vibrant to grow and scale in the future.
What should startups do in the seed stage?
In this stage, you still have to base on the founder’s personal money and from friends and family. However, it’s easier to get the attention of angel investors. Moreover, some early VC firms can take an eye on your project and let you have a chance to get a bigger fund from them. These investors typically initiate a high-level investigation of the technical, market, and economic feasibility of the opportunity. If the concept appears feasible, the investor may support the entrepreneur with time and financial resources. Once this occurs, entrepreneurs take the first steps in forming the company and developing the concept.
The fund mostly spends for:
- Getting an office and running it
- Setting up the infrastructure
- Working with partnership agreements
- Researching the market and competitors
- Developing the business plan
- Proven product-market fit (PMF) via strong users or revenue growth, high retention, and meaningful usage of the product by the users.
- Setting up the qualitative management team
- Preparing for the crisis which could come in a nut-time.
How about if you don’t get enough of your own fund?
One of the greatest choices definitely is finding out the investors.
However, running the startup’s business is not an effortless task, as you can see above, the business has to hold a ton of track lists that must be done. However, they still have the biggest task is finding the investor and pitching to pursue them to invest in your business. And honestly, it robs you and your team of time to focus on building a strong enough product to both launch the market and prove the investors.
Understanding startups’ struggles, Wiziin popped up to help you resolve your problem by servicing to connect your business with potential investors.
Wiziin is a data-driven investment platform that focuses on facilitating the professional investment decision-making process by adding innovative values to the sourcing, due diligence, following up, and exiting process.
Wiziin Inc. provides solutions in capital raising, dealmaking, portfolio monitoring, and fund administration for VC, Angel Investors, and SMEs in the Asia Pacific Region, which is created and run by experienced venture capitalists from Ireland and Canada with an ambitious approach of disruptive investment tools which contributes to leverage the emerging economies.
