Funding Resources

Although each startup follows a slightly different path, startups seeking institutional funding typically follow the depicted stages. In the seed stage, friends and family followed by angel investors will typically invest no more than $1-2M. Once the proof-of-concept is established, initial animal studies conducted and commercialization requirements understood, the startup can consider raising funding from venture capitalists. This type of funding comes in increments of $1-2M with each round designated with a letter, Series A, B, C etc. Expansion funding can also be raised to conduct extensive clinical trials, pursue regulatory approval and launch/expand in multiple markets. Finally, mezzanine funding is sought by companies that may not generate enough revenue to be self-sustaining. It is typically raised from later-stage VCs, private equity firms or crossover investors and can be used to build distribution channels, fund sales and marketing campaigns, develop product lines or attain reimbursement. This helps cement the company’s balance sheet in preparation for an IPO, after which the company goes public. Alternatively, a company may get acquired before it ever goes public.