[INFOGRAPHIC] Startup Financing Cycle

[INFOGRAPHIC] Startup Financing Cycle


Over 90% of successful tech companies are financed in pretty much the same way: You start off with basic funds from your personal saving or friends and family investors, then angel investors and angel funds, followed by either venture Capital, or public venture capital. Factoring is another option, though not unique to start ups. Some new funding opportunities are also developing in crowd funding.

Most startups fold up or better still fail just after the first year. If you are able to survive your first year and are lucky enough to break even, chances are that you could secure some form of investor funding if you work hard and are really interested in external funding. The diagram below is a  typical financing cycle for a startup company.

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  1. Frederic

    I've seen this chart many times and it is full of bullshit. Revenu cannot be negative. Cashflow can. If you replace Revenu by Cashflow, then post-seed phase investors are useless as they finance something already profitable. The valley of death usually refers to an early maturity phase where a lot has been done and spent but not enough has been demonstrated to raised VC interest.

  2. Scott

    @Frederic-You obviously do not understand business terms, fundamentals and financing. "Revenue" is frequently and inaccuratley used in place of "Income". Many VC firms are pumping cash into startups that are profitable. You better learn how capital investment can expand the business and suck all the cash out thus requiring a profitable company to obtain cash from somewhere. I'm thinking the the location of the BS is in your comment.

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