Chapter 6. Milestones and Sources of Financing the Venture
Financing in Stages
Startups require outside financing for their activities throughout their life spans until they command sufficient financial resources of their own. Since almost no new startup is capable of raising capital by traditional loans (see below for detailed explanations of various methods of financing), they are required to do so by means of equity, i.e., by joining investors in their capital stock or by issuing convertible debt. Typically, only at more advanced stages can a startup combine investment rounds with financing by straight debt.
Startups almost always raise capital in several consecutive stages, according to values that are supposed to rise consistently (sometimes, ...