Early-stage investing funds the first three stages of a company’s development. It is divided into three distinct funding types:
- Seed funding (seed capital)—money provided to help an entrepreneur start a business
- Start-up funding—money used to help a company develop products and start marketing those products
- Early-growth funding—money to help establish and boost manufacturing and sales
Early-stage investors understand that building a new business takes time and ongoing support, so they typically expect to make multiple investments in a single company as it develops.
Because there is more risk associated with new companies that don’t yet have a foothold in the marketplace, not all investors are inclined to put money into them. When a start-up company matures and becomes a late-stage company it can seek funding from late-stage investors.