What Is Later Stage Financing?

Estimated read time 3 min read

It’s not just startups that require financing. Businesses of all shapes and sizes often need extra capital to carry out their operations. Later stage financing is available for businesses that have already established a foothold in their respective market. It’s offered by venture capitalists, many of whom seek to invest in established businesses. What is later-stage financing exactly, and how does it work?

What Is Later Stage Financing?

Overview of Later Stage Financing

Later stage financing is exactly what it sounds like: financing that specifically focuses on established businesses. It’s designed for medium-sized businesses that are either close to breaking even or are already generating a profit. These businesses have already gone through the hurdles of growth — which typically comes with debt — and are now seeking another round of financing.

How Later Stage Financing Works

Financing can occur at different stages of a business’s life. There’s seed funding, for instance, that targets startups during their inception. There’s also Series B and Series C funding, which comes after seed funding. Later stage financing, of course, comes at a later stage in a business’s life. It involves businesses that have already established themselves and are either close to turning a profit or already turning a profit.

Later stage financing is offered by venture capitalists. Venture capitalists are investors who purchase an ownership stake in businesses. Businesses that need financing may sell some of their stock shares to a venture capitalist. It’s a mutually beneficial form of financing. Businesses raise capital from the sale of stock shares. Venture capitalists, on the other hand, receive an ownership stake, which may become more valuable as the business grows and becomes more profitable.

Benefits of Later Stage Financing

With later stage financing, businesses can obtain capital without taking on extra debt. Most later stage financing is classified as equity financing, meaning it involves the sale of stock shares to an investor. Businesses don’t have to seek a loan or other debt. Rather, they can use later stage financing by partnering with a venture capitalist.

Later stage financing can give established medium-sized businesses the capital they need to become profitable. Many medium-sized businesses approach profitability, only to remain slightly underwater for many years. Later stage financing can provide these businesses with the capital they need to make the push into profitability.

This article was brought to you by�Intrepid Private Capital�Group�� A Global Financial Services Company. For more information on startup and business funding, or to complete a funding application, please visit our�website.

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