All Money Is Not Created Equal

Chapter 3The Stages of a Startup

Thanks to having personal wealth from their stock options from Damascene, neither Nickerson of 4Paws nor Ley of 19/39 needed to go the “friends and family” or angel route for pre-seed or seed money. Each company transitioned from early stage (Series A and B) to late stage (Series C and beyond) after a five-year period. By their respective Series D fundings (seven years after initiating operations) each had achieved the critical milestone of being able to extract a considerable amount of information from just one vial of blood from both cats and dogs.

Two years after its Series D funding, Nickerson's 4Paws looked like it might be destined to linger in the late stage as it was clear that the company wasn't going to achieve blockbuster status, although it had several patents and some successes. It just wasn't going to be able to achieve its goal of making cat and dog food medicine. Nine years after starting his company, Nickerson sold, as his company wasn't able to attract the additional capital it needed to continue operating.

By contrast, Ley's 19/39 progressed to the growth stage. It wasn't yet profitable, but its product, Felin' Fine cat food, was popular and sales were ramping rapidly. As a result, VCs were eager to continue funding the company's ongoing investments in sales and marketing.

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Before we explore the stages of a startup, I want to establish how I am using that term. (I've borrowed from – and credited – other highly reliable ...