an entrepreneur conceives an “idea” for a business venture

if the entrepreneur has the necessary funds to start the venture, it can be financed (aka “bootstrapped”) with the entrepreneur’s own money

if the entrepreneur does not have the cash to bootstrap, angel investors can finance the initial stages of the venture with “seed capital”. Angel investors typically look to invest in an “idea”. This is the riskiest stage of startup investing, but it inherently offers the most upside

once the company / product / service is proven, the entrepreneur seeks further financing to expand the business venture

 the business owner continues to raise more money to fund operations and expansion. Each time the owner raises money, it is considered a “round” of financing and is delineated by a letter (i.e., Series A, Series B, Series C, etc.). This process continues until the business ultimately experiences a liquidity event (such as an IPO)

Extended business growth typically requires a significant amount of time and VC-backed companies have been staying private longer in recent years. This has been a major growth catalyst for the burgeoning private secondary market, where investors can acquire interest in popular late stage, VC-backed private companies (usually via investment funds). In the private secondary market, early investors and employees can seek liquidity for their investments prior to an IPO (or other liquidity event). Thus, the early investors / employees can sell their ownership stakes to other investors who did not partake in earlier rounds of VC financing.

aside from a merger or acquisition, a traditional IPO is usually the final step for any business venture.  The purpose of this step is to raise capital via an initial public offering and become a publicly traded enterprise. There exist other alternatives to the traditional IPO process, such as going public via direct listing or a SPAC or staying private, but these alternatives tend to occur less freque