|
Just browsing through crunch base, i was looking at flipboards profile http://www.crunchbase.com/company/flipboard , what i was wandering is initaly they got $10.5m series A funding and then $50m in a venture round. Was the first $10.5 capital to let them expand and develop, where as the second $50 was them selling a stake of their business to investors, to release some cash, for their own pockets as it where ? This isnt a question about flipboard but more about funding stages in general. |
|||
|
|
|
In 99% of cases, all funding rounds are for the company to raise more money to finance its operations, not for the founders to cash out. There are a few famous exceptions (Groupon notably). Technically, the company creates new shares and the VCs buy them. So the money goes to the startup. Current shareholders (founders and VCs and angels from previous rounds) don't sell their shares. Actually, they'd usually rather buy more of the new shares, so they don't get diluted. |
|||
|
|
