Venture capital: Financing a startup in the growth stage of company development

Growth or expansion stage of company development

By this point, you’re on your way to building a successful business. You have largely assembled your team and the business has initial revenues of at least $1 million from the sales of your product or service. Note that some investors may require the business to achieve higher amounts of revenue before considering investment.

Funding sources

Venture capital investors

Venture capital investors (VCs) target high-growth businesses and therefore are attracted to this phase of company development. VCs look for businesses that can scale to $25 million to $100 million in revenue within three to five years.

Angel investors

Angel investors may also provide growth capital for medium-growth businesses with $5 million to $25 million in revenue; they require more modest levels of total capital (for example, $2 million to $5 million) over the life of the business.


Here, the risk is significantly lower than in the early stages due to your demonstrated business traction, but in order to scale and grow your business to reach a critical mass, you need additional capital ($2 million to $10 million).


Growth-stage capital is often invested through a process of financing rounds, called the Series A, Series B and Series C rounds, named for the class of preferred shares issued to investors each time.

  • Series A rounds may be the seed investment round, or the round immediately thereafter. Series A funds are used to achieve the important milestone of shipping commercial products to customers.
  • Series B rounds are often used to scale the business from a marketing, sales, distribution, and operations perspective, and to take a business from its first $1 million of revenue to a scaled result of greater than $10 million of sales, thus approaching the cash-flow break-even point in the business.
  • VCs and other investors hope that for most businesses, the Series C round will be the final round of funding that enables the business to achieve a significant scale in revenues of $25 million to $1 billion and to generate a positive cash flow from its operation, thus drawing interest for business partnerships (critical for further growth and attracting exit opportunities).

Learn more about the other stages of company development:


Canada’s Venture Capital& Private Equity Association. Retrieved April 19, 2009, from
National Venture Capital Association. Retrieved April 19, 2009, from