The Second Stage In The Five Stages Of Investment For Startups
When any HK startup with a great business idea is aiming to get the operations up and running, they would at some point need additional funding. Before getting investment from external sources, they need to keep proving the worthiness of their business model and products. The startups need to steadily grow in which sometimes the biggest contributor actually comes from the generosity of friends, family, and the founders’ own financial resources. Over long term, the startup’s customer base should begin to grow, and the whole business expands. The cost of daily operations would grow at the same time, while the Hong Kong startup rises through the ranks of its direct competitors (whether they are local competitors or international/global competitors), and becomes much more highly valued. This opens the possibilities for future expansion to include new offices, employees, and IPO.
The five stages for a typical startup when getting investment funding include: Pre-seed funding, seed funding, series A, series B, and series C. The technology voucher, or officially known as the Technology Voucher Programme (TVP) fund, falls into the seed funding stage, even it is not exactly a seed fund. But it is one of the funding that is suitable for many small/medium size businesses operating locally in Hong Kong. To be eligible for the technology voucher, the business needs to be actively operating for at least one year very recently. The fund would be a great financial support (or subsidy) for IT related projects including upgrade of your existing IT infrastructure, a new ERP system, a new content management system for your various website, a revamp of your business website, a new online shop, an integration to a new customer relationship management system, and more.
Seed funding is often also known as angel investor funding. A business when keeps growing beyond this second stage of investment may need more financial support. In some cases, it is opportunity for investors to invest cash in exchange for equity or partial ownership of the business. The next funding rounds may be followed by Series A, B, and C funding rounds. In some cases, the business may be able to also earn additional capital when the appropriate situation arises. The series A, B, and C are compulsory ingredients for a business to get into the bootstrapping stage of development and/or survive through some of the very tough competitions or market environments. Usually after that, it would be fruitful results ahead of the founders and the investors.