Here's a very well-written post by Fred Wilson who is a VC with Union Square Ventures. He summarizes a more traditional view of the role of seed financings vs. Series A and Series B venture capital rounds. His view is somewhat different than what Marc Andreesen of Andreesen Horowitz recently articulated.
In Wilson's words:
"The first step you need to climb is building a product, getting it into the market, and finding product market fit. I think that’s what seed financing should be used for.
The second step you need to climb is to hire a small team that can help you operate and grow the business you have now birthed by virtue of finding product market fit. That is what Series A money is for.
The third step you need to climb is to scale that team and ramp revenues and take the market. That is what Series B money is for.
The fourth step you need to climb is to get to profitability so that your cash flow after all expenses can sustain and grow the business. That is what Series C is for.
The fifth step is generating liquidity for you, your team, and your investors. That is what the IPO or the Secondary is for."
Cick here to read the full post:
#angelinvesting #seedcapital #seriesa #seriesb #growthcapital #venturecapital #startups