What is a funding round?

"Funding round" (also known as a capital round, investment round or money round) is a step or series of steps that a company takes to attract external capital. The time between funding rounds varies and depends on the time a company needs to achieve certain objectives or milestones, which often leads to an increase in the company's valuation. As a company develops further and the risk for investors decreases, larger amounts can typically be 'raised' in later funding rounds.

During each funding round, the terms and conditions are renegotiated, giving investors specific rights linked to the shares. Shares from different funding rounds are usually named Series A, Series B, and so forth. In practice, investors will generally strive for more favourable or at least equivalent terms and conditions compared to previous rounds.