Second Round Funding

Second round funding is allowing you to continually grow your business.

Second round funding is working capital for expansions of an already established business that is producing and shipping goods and services. It is for companies that are constantly increasing their accounts receivables and growing their inventory. These funds will more often than not come from a private or angel investor or a venture capitalist.

Often times second round funding from the investor will be enough to help bolster the balance sheet enough to give a business more leverage as they pursue a loan from a bank. They could then use the financing from the loan to increase business and really grow the business even further. Sometimes banks may not want to invest in some businesses, even in the second round because they may have a risky business model. A risky business model won’t turn away many investors seeking a potentially high return on their investments.

Many businesses wonder if they are at the point where they need second round funding. If your business completed a successful launch more funds are typically needed to develop the marketing plan, hire additional staff, and establish a strategic position within the marketplace. Establishing a market position is typically known as the series B round of funding. The first round of funding is called series A. This helps investors know where they stand in regards to earlier investors. Keep a close eye on the growth of your business so you go after the funding at the right point.

First Round Funding

First round funding or "venture capital" typically follows seed and early stage capital that was used to build the business’ full-time management team, develop the business’ first saleable product, and demonstrate that the business is very likely to be profitable.

Before approaching funding sources the following should be completed:

◦Financial Analysis: Identifying all sources of revenue, assessing likely business costs, determining capital needs and modeling financial projections.

◦Market Research: Consisting of primary and secondary research to determine market size, market growth potential and other relevant factors.

◦Competitive Analysis: Identify relevant competitors and assess their strengths and weaknesses as an aid in determining underserved market needs and potential market demand for a new business’ products and/or services.

◦Business Plan Development: Developing thorough, actionable plans for implementing your mission statement and, subsequently, turning a profit.

First round funding sources are primarily hands-off investors who will open their rolodexes to aid you with their contact base and open their wallets to invest in your ready-for-market business.