Lighter Capital recently published a guide on how to choose the best funding path for your startup. It is pretty informative and outlines three funding paths that are potentially open for a tech startup. I find the guide particularly useful as less then 1% of all companies attract venture funding and it seems that nearly 100% of entrepreneurs seek out venture capital. Most companies do not raise venture funding and most entrepreneurs should not seek it.
There is a nice graphic in the guide that sums up three funding paths.
I don’t agree that companies generally raise a series A at launch and initial traction or that a series B takes place at $5 million in revenue. They both seem to come later to me.
The important takeaway from this chart is the non VC-backed path and revenue based financing. It is the path that the vast majority of startups will take and one that entrepreneurs should spend more time thinking about than pursuing venture capital.