All early-stage companies, particularly technology companies, need capital.  For most, this capital comes in various stages, or “financing cycles,” depending on the stage of development of the company or its specific capital needs.  For a very early-stage company still developing its business plan, technology or product, and management team, “seed” or “pre-seed” funding typically comes from friends and family, individual investors, early-stage Angel investors, public “seed” funds (e.g., see the “Michigan Pre-Seed Capital Fund“), and even credit cards.  This round of funding is often the most expensive for the early-stage company because of the huge risk involved for the investors; after all, most of these companies fail.  Once a company has a proven product or technology, proof of market, and a solid business plan, funding typically comes from more institutional investors such as venture funds or private equity funds.  Often this round is called “Series A” or “First Round” financing and the securities issued grant investors certain rights and preferences.  Subsequent rounds, if needed, are designated as “Series B,” “Series C,” and so on, and typically offer the same or similar terms as those offered to the first-round investors.  Beyond “Series” funding, the final phase of early-stage funding is the initial public offering, or IPO, which is the first sale of a company’s securities to the public at large.  Many companies get acquired long before getting to this stage, but all started with that initial “seed” money, without or without credit cards.

–Matt