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.
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 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.
Canada’s Venture Capital& Private Equity Association. Retrieved April 19, 2009, from www.cvca.ca.
National Venture Capital Association. Retrieved April 19, 2009, from www.nvca.org/def.html.