What Is "Series A Funding"?

Answer 1

In a start up company Series A funding refers to the first outside funding round of the company. All start up companies have as their ultimate goal, an exit event at some time in the future whether it be by IPO or an acquisition. To get there, a start up needs capital infusions (cash) at various intervals to survive because costs exceed revenues. Therefore, a start up company raises funds as needed by going to the private placement market, (angel investors, private equity funds, VC firms etc).....There are many reasons why the company raises funds in stages. One reason is that the company doesn't want to raise more funds than needed in the short term so as not to unnecessarily dilute current ownership. Investors also do not want to invest funds that are just going to sit in a bank account. Assuming the company reaches certain benchmarks and gets closer to an exit event (R&D successes, certain revenue benchmarks...etc), the company can demand a higher price for it's shares in later rounds and therefore it gives up less ownership than they would have had to in early stage financing....therefore, start up companies stage their financing rounds....Series A, Series B, Series C...etc....at each stage the price per share is dependant on the current prospects of the company....hopefully for the company and current investors, the price per share they can demand is higher at each stage of financing but if the company ends up struggling the shares in the later rounds could be at a lower price per share.

Answer 2

Series A Funding is the first or initial round of stock or equity financing that a start-up or (new to the equity markets) receives.

This start-up is expected, in the future to further financing needs and will ask for later Series B, C...financing later as future benchmarks are made like Sales Revenue, invention patented, corporate partnerships secured.