What is a funding round?

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

During each funding round, the conditions are renegotiated, with investors receiving specific rights attached to the shares. Shares from different funding rounds are usually named with Series A, Series B, and so on. In practice, investors will usually strive for more favorable or at least equivalent conditions as in previous rounds.