In May 2021, Skyroot Aerospace¹, which was founded by former ISRO scientists Pawan Kumar Chandana and Naga Bharath Daka in 2018, raised $11 million in Series A funding round. Skyroot Aerospace which develops privately built space launch vehicles intends to use these funds to grow their team and to complete the development and testing of their subsystems for their first launch vehicle rocket program Vikram-1.

What is Series A Funding Round?

Series A Funding² is the second stage of start-up financing and the first stage of venture capital financing. In the case of a start-up company, the Series A funding round follows the seed financing, and it is followed by the Series B funding round. 

Source of Financing

Just like seed financing, Series A financing is generally equity-based financing. At times it can indicate the class of preferred stock as well³. Generally, at this point, companies raise capital by selling their shares with anti-dilution provisions. Thus, start-ups prefer to issue preferred shares as they do not have voting rights. Venture capital firms are the common source of this round of funding, although angel investors cannot be ruled out. Some firms may use equity crowdfunding too.

When and how much?

In a start-up venture, seed fund is generally invested by friends, family, or an angel investor. These funds are spent on R&D, developing proof-of-concept, testing and salaries to staff. After developing the proof-of-concept, firms look for the next round of funding, i.e., Series A funding⁴ which is higher than the seed round and usually ranges between $2 million and $15 million. 

How?

This funding is considered to be extremely difficult. Studies ⁵ put the chances of odds in favour of getting the Series A funding at 1:400. Securing the Series A funding is as important as the timing of it. To get this round funding ⁶ the teams should be familiar with what venture funds look for, to ascertain if the company is Series A ready. Starting early and leveraging networking to create a fundraising momentum lead to success.

Conclusion

In May 2021 Fireflies.ai the company⁷ which provides voice assistant for all major video conferencing platforms like Zoom, Google Meet, Microsoft Teams, Webex, GotoMeeting, and Skype has raised ₹100 crore as a part of its Series A funding round, to fuel its next phase of growth. But one must be aware of the fact that getting this round of financing is like breaking the shell of fund-limitation. This marks a new beginning of a long journey in the life of a start-up.

Learners’ Opportunity

Funding is the lifeline of a business. Decisions at the right time are crucial here. Management decision making is an intricate process and is mastered through skills. Online MBA program from IFHE provides ample insights to various situations where businesses are successfully steered in challenging situations. Various eLearning and flexible learning methodologies support this. Check out @ https://online.ifheindia.org/

Discussion Question

According to you, what could be the main constraint for launching start-ups in India? Fund crisis or bureaucratic complexities? Why?

Source Articles

1. Shreya, G. (2021, May 20). Spacetech start-up Skyroot Aerospace raises $11M in Series A funding. Your Story. 

2. Institute of Corporate Finance. (n.d.). Series A Financing. Corporate Finance Institute. 

3. Fundz. (n.d.). Series A, B, C Funding: Averages, Investors, Valuations. Fundz.

4. Startups.  Series A, B, C, D, and E Funding: How It Works. 

5. RESEARCHBRIEFS. (n.d.). Venture Capital Funnel Shows Odds Of Becoming A Unicorn Are About 1%. CB Insights.

6. MonsterIndia. (n.d.). 10 things to know when raising Series A funding.

7. Bhalla, T. (2021, May 24). Fireflies.ai raises ₹100 Cr in Series A funding led by Khosla Ventures. Mint.