Understanding differences in startup financing stages

1. get found. get funded.

2. Financing options for
European startups
Investment landscape has changed significantly over the past few years,
especially at the early stage, where new investment vehicles and
platforms have been created

3. Pre-seed
An idea, a working
prototype and
funding that will
allow the
entrepreneurs to
focus full time on
the project.
FFF: Friends, family & fools
Accelerators
Mentorship, office space and
capital in exchange for 5 to 10 per
cent equity
Successful entrepreneurs
Previous startup founders who
have had exits and decide to invest
their money in their new venture

4. • Get the company
running and find
product-market
fit.
• Seed rounds in
Europe range
from €250K to
€750K/€1M
Traditionally: Angels, super
angels & Venture Capital
firms
Alternatives: Crowdfunding
Two types:
• Reward-based crowdfunding:
users provide capital and get
goods/services in return
• Equity crowdfunding: investors
provide capital and get equity in
return
Angel syndicates
• Lead angel investors allow other
angels to co-invest in deals.
• Online platforms connect angels
& startups
Seed

5. Series A
• Established
product and
capital to scale
and set business
model
• Series A rounds
in Europe range
from €2M to €5M
Venture Capital firms lead
Series A investments
Challenges in Europe:
• Series A crunch: only 6% of
European companies managed
to secure an A round (2009-
2014)
• Big gap compared to Series A in
the US
Data from Christian Hernandez & Stephen
Piron

6. Series B
• Scaling and
growing
• Series B in
Europe: €6M to
€10M
Often led (or participated)
by US-based VC firms
Challenges in Europe:
• Very few companies reach this
stage, and a fewer % compared
to the US
• Only certain European VC firms
have the capacity to lead Series
B rounds
• The number of Series B deals in
Europe remained flat over the
period while it grew 37 percent
in the U.S. - Christian
Hernandez & Stephen Piron

7. Series C/D
• Mature
companies and
revenue in the
millions
• Series C/D in
Europe: tens to
hundreds of
millions
Private Equity firms and
investment banks join the
game
End of the road?
Three main ways to ‘exit’:
• Acquisition of other startups to
grow
• Get acquired by bigger
companies, providing exit to
investors and founders
• IPO: NASDAQ, LSE

8. Thanks for your attention!
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