Start-Up Visualisation

The 5 stages of Funding

As a startup owner, you must evaluate where your startup stands in the proces. It is very critical for a startup in any phase what so ever to aqcuire as much funds as possible. These aqcuired funds are then used to develop or invent new products that will then be launched to the public. We will begin with a small and simple graph, explaining what types of funding there exists and how much every type has yielded so far. (The amounts are shown in Billion of dollars)

Amount raised per funding type 1

As seen on this graph, Venture Funding is the stage where Startups get the most money from their Investors. Followed by Private Equity and Debt Financing. We will try to cover all of them later on the page. The rest of the stages and possible funding options are definitely less profitable, and in those later stages, investors tend to give less money and less startups start this type of funding.

Amount raised per funding type 2

After we removed the 3 largest funding types, we reconstructed the data, so the rest of the funding options are visible.

Seed Capital

This is typically the very first investment of money used for market research and developing a product. This stage is commonly know as the bootstrapping stage. Here we want to explore the feasibility of building an idea into a product or service. As mentioned earlier, this is also the time for a startup to test the market and develop a marketing and sales plan for the product launch. The funding itself will mainly come from the founder's personal savings or from acquaintances (like family or friends). The Seed Capital can be received as a loan or in exchange for stocks later in the process of the startup. Approx. amount funded: $50k.

Seeding vs. No Seeding

It's obvious that not every startup can raise money to get them of the ground. This pie chart shows that only 56% of the startups get a Seed Funding. That's 44% of the startups that can't get any money and therefore go out of business!

Seed Count Per Market

It is obvious from this graph which markets can get more Seed Funding than others. Everything related to Technologie is still very popular, and has a big opportunity to aqcuire Seed Funding. The dataset also contains over more than 500 different markets, but in this graph, we have chosen to only show the 15 most popular ones. These 15 markets already take 45% of the total seed funding amount. This graph shows how many Seed Funding was acquired per market type.

Percent Number of Respondants

Success rate

One very important fact to note about seed funding is shown in the graph below. Not every startup that starts such a seed round will aquire money. It all depends on the business idea and the people behind it! This graphs shows how some categories have more chance to succeed in this round then others. The graph can show the data both in percentages and in actual numbers. The left axis shows how many Seed rounds started in a specific Market.

Well-known startups

We will now try to zoom in some more on specific parts of the world. The first step is showing how much Seed funding the following big, famous companies aqcuired back when they just started. In this graph we feature Uber, Dropbox, Airbnb, lyft and Reddit

Startups in Belgium

Lastly we will zoom in even further, looking at the companies here in Belgium. The graph shown here contains the data of the 10 companies that aquired the most Seed funding in the last couple of years. One company that got our attention is Collibra, a startup that has appeared multiple times in the news lately.

Extra: Convertibel Note

A convertible note is short-term debt that converts into equity. In the context of a seed financing, the debt typically automatically converts into shares of preferred stock upon the closing of a Series A round of financing. In other words, investors loan money to a startup as its first round of funding; and then rather than get their money back with interest, the investors receive shares of preferred stock as part of the startup’s initial preferred stock financing, based on the terms of the note. Unfortunately, this type of funding isn't started that much in comparision with other types. This was also vissible on the first graph of this chapter. Sadly, this means also that we didn't have enough data to visualize this properly.

Angel Investors

At this stage a startup will try to launch it's product and build traction until revenue starts coming in. At this stage it's also time to start recruiting other talanted people to help with development of the product/service. Of course the first stage, Seed Capital, is likely almost limited. That's why it's important for a founder of a startup to reach out to wealthy individuals outside of their personal contacts. Those individuals are often called "Angel" Invetors. (Approx Fundraising: $3M.)

Angel Investing Per Year

It's very important to note, that Angel Investing is hard to aquire. When we look at the data, there 49 436 companies in total. But not all of them reach each stage of the funding process. When we take a closer look, we can see that there are 50 280 attempts to try and start a Funding round, and only 2059 of these rounds are an Angel Investing round. These 2059 attempts are listed below and grouped by year.

We can clearly see in the graph above that the term angel investing wasn't really know before 2007. Companies back then tried to survive on their own until they were capable of entering Venture Capital. 2007 was clearly a breakpoint, from this time on, wealthy people saw opportunities to invest in those small startups and so they became the "angel" investors. The small decrease coming from year 2008 and going into 2009 can be explained with the big bank crisis that occured around that date.

Angel Investing Per Market

We also try to look how the different markets hold against each other in each funding round. This graph shows us how much each market has raised in Angel funding (in Millions). Here it is again obvious that tech-oriented startups have more opportunities to raise/aquire money in the Angel Funding round.

Venture Capital

This type of funding is typically used by companies that are already distributing/selling their product or service, even though they may not be profitable yet. If the startup is not profitable yet, then the Venture Capital (VC) will likely be used to offset the negative cash flow. There can be multiple rounds of VC funding and each is typically given a letter of the alphabet. In all these different rounds of financing, the money that is invested is typically received in exchange for preferred stocks. The first three Series are given as an example:

Series A: It's the first round of VC financing. In this stage, the startup is all set in terms of product development and has to provide preferred stock to investors.
Series B: This stage allows startups to grow so that they can meet the various demands of their customers. Here they are scaling up and increasing their market share.
Series C: In this stage, startups search for more funding to help them build new products, reach new markets, even acquire other under-performing startups.

Of course there can follow more Series, the main purpose of them is to put the company on IPO track (last Stage). Approx Fundraising: $15M - $50M.

We will first take a closer look into the venture Dataset. There are more than 70 000 venture funding rounds started (a startup can start multiple rounds). A Startup that enters a Venture funding round will try to give the round a name, like mentioned above. 77.3% are venture fundings with a specified round (A,B,C,...). Below, we can see a pie chart showing what type of round is started the most.

Rounds

We can see that round A and B are more started than the rest of the rounds, this is very simple to explain. A startup can't start a VC Round C if they haven't started and finished the previous rounds, in this case VC Round A and B. An other explanation for this is that some startups don't want to start 5 VC rounds. For those companies that don’t close up shop or achieve financial sustainability, an exit from the VC fundraising cycle comes in one of two varieties: an acquisition or an IPO. Important to note is that a Startup can be aquired at every stage of the VC funding. You can scroll down more if you want to learn more about acquiring Startups.

Something else that is interesting to look at is the amount of money that a startup can raise at every stage of the VC funding. This graphs shows that startups are getting most of the money out of Round B. Even Round C and D are getting better funded then A, an explenation for this can be found in the Startups/companies itself. When a Startup starts a VC Round B it will have ended a Round A earlier in the proces and thus it will have more money. This money will be used to improve the Startup and make it a more established one. A more established company will be funded more because investors are less likely to lose their money.

After reviewing how much money each round got for different startups, we can also look at how many startups that started a specific round. This graph shows how many attempts there were made by startups to start a specific VC round. It is obvious that round A is started way more then round B or C. One reason for this is because a startup can go bankrupt or an other company aqcuires the startup. One thing to also mention in this graph is the large number for the no rounds, this is mainly because some startups don't really want to tell what round they are in or they don't feel like sharing it with there competitors.

Lastly we will zoom in some more on the Belgium startups, the graph below show the 10 startups/companies that aquired the most Venture funding in the last 10 years. One key aspect to take away here, is the fact that 5 of these companies are positioned in the Biotech sector. Once again this show that Belgium is a perfect environment for young startups to grow, especially in the Biotech sector.

Mezzanine Financing & Bridge Loans

At this point, companies may be eyeing the following opportunities that require additional funds:

1) An IPO
2) An Acquisition of a Competitor
3) A Management Buyout

This sort of financing is often used 6 to 12 months before an IPO and then the IPO's proceeds are used by the company to pay back the mezannine financing investor. We will first talk some more about Debt Financing.

Debt Financing

Debt financing happens when a company raises money by selling debt instruments to investors. The opposite of Debt financing is equity financing, which includes issuing stock to raise money (explained further on the page) . Debt financing occurs when a firm sells fixed income products, such as bonds, bills, or notes. While equity financing does not need to be paid back, debt financing does.

The first thing we look at is the evolution of debt financing, has it changed over the past years? Below we can see the raised capital by debt financing from every year. We can definitly see an increase in this type of funding in the last years.

This graph shows us more specific how large the raised amounts are in Debt Financing. The main advantage of debt financing over equity financing is that the lender does not take an equity position in your business. You retain full ownership and the lender has no control over the running of the business. That's also a main reason why most start-ups want to keep this sort funding as low as possible, they must be able to pay the amount back to the investor so he or she doesn't get a position inside their startup.

IPO

IPO or Initial Public Offering is the process of offering corporate shares to the general public for the first time. The IPO’s opening stock price is typically set with the help of investment bankers who commit to selling X number of the company’s shares at Y price, raising money for the company. At this stage the startup has grown to a full company, an example of such a company is Airbnb, they are getting for an IPO in the next year or two. The dataset itself doesn't hold info about the companies and their IPO values, but something we can research and visualize are the following two extra funding types.

Post IPO Equity

A post-IPO equity round takes place when firms invest in a company after the company has already gone public. Normally a company would have enough revenue and cash at hand after they went public. But some companies still need more cash to finance some operation, that's why Post IPO equity exists. There aren't that much entries in our dataset for this type of funding, due to the reason describe earlier. One thing we can visualize are the amounts that companies raise in Equity funding. One important thing to note in this type of funding is that big companies like Google and Alibaba are represented as investors, this might be a first step to aquire these startups on a later point. One thing we can conclude from the data is that companies that do start a post IPO Equity funding, get a really big amount of funding over time. Some of these companies will even get a funding with a value from over 500M dollars.

Post IPO Debt

A post-IPO debt round takes place when firms loan a company money after the company has already gone public. Similar to debt financing, a company will promise to repay the principal as well as added interest on the debt. This type of "funding" isn't started quite often, most of the companies that start their IPO/market journey, will have enough funding to for example expand and live long enough in to the future. One important thing to note is the fact that most of the "investors" in this type are banks, for example Citibank and Barclays. We don't think this is a funding round like the others, so this is also a reason why won't go in depth on this topic. Unfortunately this dataset also doesn't contain enough data to visualize this type, but people who want more info about this topic, can always follow this link

Extra Type

Undisclosed

The dataset also contains undisclosed funding rounds, these are rounds where the startup and the investor don't want to share with the public how much funding they raised. The single most common reason for an investment amount remaining undisclosed is that the size of the round would be viewed by the market as derisory in comparison to competitors. This is particularly common at the seed stage, and even more so outside of Silicon Valley where funding is usually a lot lower on a like-for-like basis. (Source)

Private Equity

Private equity is equity—ownership or an interest in an entity—that is not publicly listed or traded. A source of investment capital, private equity actually comes from high-net-worth individuals and firms that purchase shares of private companies or acquire control of public companies with plans to take them private, eventually delisting them from public stock exchanges. Most of the private equity industry is made up of large institutional investors, such as pension funds, and large private equity firms funded by a group of accredited investors. (Source)

One important fact to remember about this type, it the fact that some big companies like Google and Yahoo are represented in this type of funding. Below we show some interesting investments in well known companies, sometimes the investment is done by an other famous company, like Google or Johnson-Johnson.

Startups: Inside and Out

Startup Overview

Number of startups per country

Number of startups per category

Investors

Persons and organisations

Types of investors

Geographic spread

Number of investors per country

Amount of investors per US state

Investor's markets

Amount of investors by market category

Startup-Investor relations

Funding