Question

Following are the conventional stages of startup funding:
A Initial Public Offer(IPO) issue
B. Procurement of mezzanine financing
C. Venture capital funding
D. Angel Investor financing
E. Seed capital acquisition
Choose the most appropriate answer from the options given below that shows right sequence

• A. A, E, D, C, B
• B. D, E, A, B, C
• C. A, B, E, C, D
• D. E, D, C, B, A

Answer 1

The Correct Option is D

The process of startup funding typically follows a series of stages that help a startup go from an idea to a fully functioning business. Understanding these stages is crucial for anyone looking to secure funding for their venture.

Let's examine these stages one by one in the correct sequence:

1. Seed Capital Acquisition (E): This is the initial funding used to start a business. It's often provided by the founders themselves or by family and friends. This stage is crucial for covering early expenses such as product development and market research.
2. Angel Investor Financing (D): After exhausting seed funds, startups often seek additional funding from angel investors. These individuals invest in early-stage startups in exchange for equity or convertible debt, and they often provide valuable guidance and mentorship.
3. Venture Capital Funding (C): As the startup begins to grow, it may seek larger capital infusions from venture capitalists. These funds are used to scale operations and potentially lead to significant business growth. Venture capitalists usually look for promising startups with high growth potential.
4. Procurement of Mezzanine Financing (B): Once a startup has established its business model and starts generating revenue, it might seek mezzanine financing. This hybrid of debt and equity financing is used to prepare the company for an initial public offering (IPO) or acquisition.
5. Initial Public Offer (IPO) Issue (A): The final stage for many startups is going public. An IPO allows a company to raise significant capital by selling shares to the public. This step provides liquidity for founders and early investors while attracting a broader investor base.

Therefore, the correct sequence of conventional stages of startup funding is:

1. Seed Capital Acquisition (E)
2. Angel Investor Financing (D)
3. Venture Capital Funding (C)
4. Procurement of Mezzanine Financing (B)
5. Initial Public Offer (IPO) Issue (A)

Based on the explanation above, the correct answer is: E, D, C, B, A.