MaRS Library Venture capital: Financing a startup in the later stage of company development
The later stage of company development
Some venture capitalists (VCs) or other investors focus on later-stage investing—providing the financing to grow beyond critical mass and to attract public financing through a stock offering.
Funding sources: Venture capital investment
Some venture capital funds specialize in acquisition, turn-around or recapitalization of public and private companies that they deem to represent favourable investment opportunities.
Alternatively, a later-stage venture capital firm may invest to help companies acquire another company as a way to achieve scale, or to provide liquidity and an exit for the company’s founders and early investors.
At this stage, the operational risk of the business has been lowered through the scaling of revenue, and through partner relationships with customers and distributors. However, risks remain with respect to competitors, the sale of products and services, and the market in which you might take your business public.
In addition to governance and other regulations, each public stock market (for example, TSX, NASDAQ) has minimum financial listing requirements for private companies seeking their first public stock offering.
Investment bankers and underwriters who assist with public offerings develop a set of financial criteria for companies they are willing to work with, and these criteria change depending on the health of the public market. The criteria are similar to those from the stock markets, but may vary with the type of business and include a minimum target valuation (market cap) for your company, minimum thresholds for assets and revenues, and a minimum number of quarters or years that the business has been profitable.
Learn more about the other stages of company development:
Concept stage of company development
Start-up phase of company development
Growth or expansion stage of company development
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.
- Value proposition and Blank’s customer discovery method—Phase 3: Test your product concept.
- Strategic planning: How product differentiation strategy depends on market type.
- Convertible debentures and early round equity financing.
- The elevator pitch: Pitch your business to investors in 30 seconds.
- Debt financing: Angel investors, leasing companies, venture debt funds and more.