The startup funding landscape is always changing, but there are some key factors that every founder needs to know.
Pre-seed funding is money that startups use to validate their idea, build a prototype, and cover initial expenses before they secure larger investments. It typically comes from friends and family who believe in the founder’s vision, or through accelerator programs like Y Combinator and Techstars that provide seed money in exchange for equity.
Seed investors want to see solid revenue growth, clear market opportunities, and a well-articulated business plan in order to increase their investment. They are often seasoned entrepreneurs themselves and can offer valuable advice and guidance as you grow your startup.
Angel investors are individuals who make higher-risk bets on promising startups, usually in exchange for a small share of the company. They tend to have more experience in specific industries, and can connect you with other industry leaders.
Venture capitalists are large funds that raise money from LPs (limited partners), then invest it in promising startups. They prefer to see consistent revenue growth, and a clear strategy for scaling with healthy profit margins.
Having transparent, up-to-date financials is the most important factor in any startup funding round. Using an automated accounting platform, like Digits, provides investors with real-time visibility and a complete financial picture, demonstrating that you are prepared to scale and manage growth effectively.