Article / Hunter’s guide to… funding Money money money.
When it comes to funding a Start-up or scaling a business in Australia, founders generally encounter a dynamic landscape. Obviously Google or ChatGPT can spew up a wealth of information, but to cut through the clutter and help support informed decision-making, we thought we’d share our take on the various funding options out there for entrepreneurs along with some names worth stalking.
Series
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As your start-up or scale-up progresses through different stages of growth, the type of funding that best suits your business depends on factors such as your industry, financial needs, and the current stage of your company. Our breakdown of the options typically available goes a little like this:
Pre-seed funding
AKA ‘Boot strapping', this stage of funding is the earliest for a start-up and typically provided by the founders themselves, their friends and family, or early supporters.
This stage usually takes place when your start-up is still in the conceptual or prototyping phase, with minimal or no traction. The purpose of pre-seed funding is to help founders validate their business idea, build their product or service, and lay the groundwork for future growth and investment.
Seed funding
This is the next stage in the start-up funding journey after pre-seed funding. It involves raising capital from external sources, such as angel investors, family offices, seed-stage venture capital firms, and sometimes government grants. This stage typically occurs when a start-up has already established a viable product or service and is starting to generate initial revenue or traction. The primary purpose of seed funding is to help a start-up scale operations, expand its team, invest in marketing and sales efforts, and further develop its product or service. Depending on the category and the start-up's specific needs, seed funding rounds usually range from $500 thousand to $4 million.
Unlike pre-seed funding, which often comes from the founders' personal networks, seed funding is typically obtained from professional investors who have experience in the start-up world. These investors provide not only capital but also valuable connections, mentorship, and strategic guidance to help your start-up navigate the early stages of growth.
Other avenues of investment to consider for this stage include Non-Bank Lenders such as Tractor Ventures, Crowd Funding platforms like Venture Crowd and Birchal, and also revenue-based financing, incubators and accelerators.
Early-stage funding
Often referred to as Series A funding, follows seed funding and marks the beginning of venture capital involvement in a start-up's growth trajectory. This round is typically led by venture capital firms, with the goal of providing the startup with the resources necessary to accelerate growth, expand market presence, and establish itself as a significant player in its industry. Our shout out here would be on VC firms such as Airtree, AF Ventures, Antler, Blackbird, Five V and River Capital.
Early-stage funding rounds are often larger than seed rounds, ranging from $4 million to $10 million or more, depending on your start-up's potential and the competitive landscape. At this stage, investors are looking for companies with strong traction, a well-defined business model, and a solid team capable of executing their vision.
As things start to get very real for your start-up, the proceeds from early-stage funding are typically used to scale your operations, increase marketing and sales efforts, hire key employees, and further develop its products or services. This stage is crucial for start-ups aiming to establish a strong market position and set the foundation for long-term success.
Growth-stage funding
Right, we’ve gone past Series A. The next stage of funding are the additional rounds such as Series B, Series C, and so on. These rounds are designed to provide you with the necessary capital to support rapid growth, expand into new markets, and potentially make strategic acquisitions.
Growth-stage funding rounds are typically led by later-stage venture capital firms and private equity firms, with investment amounts ranging from $10 million to $100 million or more. Investors in these rounds are looking for startups with proven business models, substantial revenue, and strong growth potential. Of the PE firms we’ve come across, Blackstone, KKR, L Catterton, Quadrant, The Carlyle Group, The Riverside Company are shining lights.
The capital raised during growth-stage funding is often used to finance activities such as international expansion, product diversification, mergers and acquisitions, and the development of new technologies or services. This stage is vital for startups that are well-established and seeking to become market leaders or even achieve that Uber of all statures, the unicorn status (a valuation of over $1 billion).
Further thoughts on funding
So, that’s a full stop on our first Hunter guide to… Funding. Whilst our insights offer a general overview, it's always good consulting with industry professionals and experienced founders for more specific, independent advice. Also, this Airtree article does a pretty good job of spilling even more beans on funding, along with even more connections worth making.
You can thank us (and Airtree) later.
