Investors aren’t just altruistic startup entrepreneurial loving business people. Although they may be genuinely interested in the business, as many angel investors are, they ask for a portion of the business in turn for giving money. Before each round, a valuation of the company pie is typically released. Valuations derived from considerations such as management, proven track record, market size, and risk.
To grow the pie’s circumference, more than a few slices need to be given away. In fact, most of the slices will be auctioned off for funding. Many small business owners with a big idea would rather have a sliver of a massive pie than the entirety of a bite-sized treat.
Please remember that series A, B, and C have nothing to do with the alphabet, rather with the development stage of the companies that are raising capital.
Related Article: How Funding Works – Splitting The Equity Pie With Investors
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