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If you’re a new startup or a company looking to grow, you can seek investment from a variety of sources. There are typically startup funding rounds you will go through, and earning PR funding through seed rounds provides great PR opportunities.

What is startup funding?

The capital necessary to launch or grow a business is known as startup funding, and you should make yourself aware of its sources and find one that is suited to your needs. Securing the necessary PR funding to start a business or to elevate it to the next level can be intimidating. However, there are many options to explore to secure financing for your business. These vary between country and industry.

Personal funding

While the top source of startup funding is from personal savings and credit, many startup founders can turn their heads to friends and family for investment. If you’re careful to avoid personal complications, asking for financial help from your close connections is a great funding opportunity, as people will need less convincing than banks.

Venture Capital

This is a type of financing provided by private investors to startups that they believe have long-term growth potential. This is similar to investment from angel investors, the difference being that angel investors are individuals investing their personal funds. In contrast, the source of venture capital is typically another firm or larger business.

Other sources

There is also the option of securing loans from banks or exploring crowdfunding, of which the latter seeks to tap into collective interest in an idea. Government grants could also be an option depending on your location.

How PR can help startups

PR is a great tool for getting the attention of venture capitalists at various funding rounds
Funding rounds
Brand awareness
Attracting stakeholders

Funding rounds

PR is a great tool for getting venture capitalists’ attention, and a funding press release is so important in obtaining venture capital. A funding opportunity announcement lets investors know you are looking for investment while simultaneously telling them you are worth investing in. They will consider investing in your company a low risk when compared to businesses they are unfamiliar with.

Brand awareness and thought leadership

The goals and objectives of tech PR for startups are to increase brand awareness and position yourself as a thought leader within your industry. By using these strategic communications techniques to increase your credibility, investors will be more trusting of your brand. Venture capitalists generally don’t finance startups from the beginning, so taking time to earn media coverage with effective PR will help secure investor funding rounds.

Attracting stakeholders

Acquiring new funding can also attract the attention of top talent for your team and customers or clients for your business.

The typical startups funding round

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PR for series seed rounds

Seed rounds are the first rounds of funding a business can seek to acquire, and their purpose is to raise enough funds to push a startup from its conception to the initial stages of market research and product development.

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It is the first stage of equity based financing, and as such, is a high risk stage of investment. A seed startup has yet to demonstrate their profitability which is why there is rarely funding from venture capitalists or banks.

Seed rounds are probably the most complicated stage for funding, as a company has limited numbers and information to share with investors. This is why PR for seed funding will focus heavily on the story behind the brand, and why it is a viable and necessary product or service. Despite these risks, investment at the seed round stage can have huge payoffs if a company successfully grows.

PR for angel investment

An angel investor is someone who invests in a new or small business venture, providing them with the finances to get an idea off the ground and into the stages of research and development.

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Although the funding from angel investors often comes with a higher return rate than more traditional investments, it is far less risky when compared to a loan from the bank debt financing that you have to pay back.

PR is necessary for presenting your business in an exciting way that angel investors will take notice of, ensuring that you are taking advantage of the funding opportunities offered by these investors.

Typically angel investments come from family and friends, but because seed startups have a high rate of failure, it is very important to be upfront about these risks to avoid ruining treasured relationships. Alternatively, angel investments may come from wealthy individuals or groups of angel syndicates who pool their funds to obtain equity of new exciting businesses.

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PR for series A fundings

Series A startup funding is the first stage of funding in which a business begins venture capital financing. It is similar to seed round funding in that it is equity based, and secures financing by selling the company’s shares.

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Venture capital is the term used for investment in a new startup, and commonly comes from firms that specialize in investing in new companies that are already generating revenue.

The objective of a series A funding round press release is to focus on reaching out to investors to ensure the continued growth of a company. Sharing your investment funding rounds in the press is a good way to secure further investment, as it can demonstrate trust from other investors and how ambitious a company is in utilizing the resources available to them.

PR for series B funding

The series B funding round is the third stage of funding for a startup, and the strategies that are involved in securing series b startup funding differs from those involved in securing series a startup funding.

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This is the second round of investment for startups that comes from venture capitalists and is appropriate for companies that are generating stable revenues and demonstrating profit.

The financing from the series B round of funding is used to support a company’s growth to the next stage, which is achieved through increased talent acquisition, developing new products and services and expanding into new markets.

As companies have proven their success at this stage, investment is more low-risk and investors can be comfortable providing larger amounts of financing. These large numbers can speak for themselves in the PR funding opportunity announcement, as a company that is being heavily invested in will generate more interest from other investors. A series B funding press release should focus on how a company is already succeeding and achieving their mission and are looking for investors to continue their growth.

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PR for series C

Only very successful businesses will make it to this funding round. This includes not only rapidly growing startups with a substantial user base, but established brands also looking to expand to the next stage.

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Due to the demonstrated success of companies in this round, groups such as hedge funds and investment banks will be looking to get involved in what is now a low-risk investment.

These large investments are great PR as it demonstrates fantastic credibility in a company. Additionally at this stage companies are ready to begin acquisition of other brands, which also provide moments for PR and cements a brand’s position as a leader in their industry.

Media training

The fourth stage in a company’s financial funding cycle is series D. In this stage a business is already very successful, and finances are usually sought to achieve a specific goal such as a merger or acquisition, or expansion into a new market.

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It is usually a new opportunity that has presented itself, and as a company has already gone through series C, they need an extra boost of funding to achieve their objectives.

Due to the established success of companies going through this round of funding, PR can focus efforts on top tier publications during funding press releases. Acquisitions and new expansions of companies at this scale will be of great interest, and due to the specific reasons for funding at this level it is a great opportunity to connect your brand’s values into the story.

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How can PR help your funding efforts?

As a startup, securing funding is a difficult job. You are one of many seeking financial backing, as there is fierce competition against other entrepreneurs looking to grow their business. It takes time to convince investors, time in which you may be running low on finances. As such, the process can be stressful, time-consuming, and often demoralizing. However, if successful, the payoff is worth it, and you can walk away with the cash to grow your business.

Brand differentiation

The saturation of communication in the digital age affects investors, who are constantly bombarded with innovative startups. Public relations can be of great service in distinguishing you from your competitors and helping to convince investors to invest in your company.

Media advantage

PR helps you handle media attention during a funding announcement press release. Establishing yourself in the media builds trust among your target audience and potential investors. This is because earned media is viewed as the most authentic form of marketing.

Building credibility

Obtaining funding provides great PR opportunities to present your business as credible and trustworthy. Using PR to increase your brand visibility and establish yourself as a leader in your industry is a sure way to increase interest in your brand and secure success at various investment rounds, as well as help you to expand the reach of your funding press release.

PR Fundraising

Fundraising is key to securing your business’ place in the market
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You can have the most creative, innovative product or service, but without fundraising to help you bring it to the masses, it’s impossible for your brand to have the impact it deserves
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Fundraising can be challenging, whether you’re still getting established or just looking to grow your business. This is where good PR can make a world of difference
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By covering your brands’ vision, identity and unique contributions, potential investors’ awareness and interest has been gained, meaning they may begin to approach you with a view to invest in your business

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FAQs

Some answers for the most common PR funding questions

What is startup funding?

Startup funding is the acquisition of finances from investors to start a business or take it to the next level. While the top source of startup funding is from personal savings and credit, many founders can get help from friends and family. Startup funding also comes from venture capital. This financing private investors provide to startups that they believe have growth potential. This is similar to investment from angel investors, but angel investors are individuals investing their funds, whereas venture capital tends to come from a firm or large business. There is also the option of bank loans and exploring crowdfunding, which taps into a collective interest in an idea.

What does series a funding mean?

Series A startup funding is the first stage of funding in which a business begins venture capital financing. Venture capital is the term used for investment in a new startup and commonly comes from firms that specialize in investing in new companies already generating revenue. It is similar to seed round funding in that it is equity-based and secures financing by selling the company's shares. The objective of a series A funding press release is to focus on reaching out to investors to ensure a company's continued growth.

How to announce a funding round?

The investment funding round your company is on will determine your approach to pitching to the media. You announce an investment round for startups by getting publications to share your funding achievements. Top-tier publications are only interested in large investments. However, you don't just send journalists the numbers. You need a good story to tell to maximize engagement with the news. There are many logistics to consider with a funding announcement, such as the timing, the images used, reaching out to clients, and distributing on your website and social media. These are strategies PRLab can assist you with.

How long does it take to secure PR funding for my business?

Various factors, including the specific PR funding option chosen, the complexity of the funding process, and party responsiveness, influence how long it takes to secure PR funding. In addition to the choice of PR funding, the complexity and amount of documentation required can also affect the timeline. For instance, traditional banks may take a long time to approve a business loan. Depending on the funding provider or investor, they may spend a variety of time conducting due diligence and evaluating the business. They may need to evaluate the financial health of the business. In addition to market conditions, regulatory requirements and other circumstances can play a role.

What are the risks and potential downsides of PR funding?

The cost of PR funding can adversely affect your cash flow and profitability since it entails repaying the funds and paying interest and fees. PR funding may come with fees, like origination fees. These costs can add up, potentially affecting the ROI of the campaign. Failure to meet obligations may result in default, damage to your credit, lawsuit, or loss of other assets. You may be required to give up ownership, equity, or control if you choose PR funding.

What is a funding round?

There are many funding rounds for startups, each defined by the business stage and how much they need to move to a different round. The first round is a seed round when a company looks to launch its idea. You can raise it to a series A round when it gains traction. If you demonstrate growth, you move to the next, series B. This round is for companies ready to scale. After, they move to series C to expand into new markets. Finally, series D, to fund unexpected new growth opportunities or help achieve the growth expected during series C.

How can PR help your funding efforts?

PR can help with funding as it increases trust between your brand, investors, and consumers. Sharing the news that you have acquired funding reinforces your brand's credibility. Taking advantage of funding press releases and sharing your progress is a way to secure investment. It can demonstrate trust from other investors and how ambitious a company utilizes the available resources. PRLab can offer various services to help establish your reputation through earned media, including PR funding and a consistent content and social media plan. We also offer media training to help you become more confident at pitching to journalists and investors.

What is the difference between PR funding and PR fundraising?

Funding for your business could be anything from investments from friends, family, or mentors to investments from venture capitalists or banks. PR funding shares these achievements in the media, spreading your mission and positioning your business as one investors believe in. PR funding incorporates funding opportunity announcements so that investors can approach you and get involved in growing your business. PR fundraising is the process of obtaining new investments using strategic PR techniques. This could look like anything from press coverage to social media campaigns, but the overall goal is positioning your business as worth investing in.

How can my business repay the PR funding?

PR funding repayment terms can vary. Funding can be repaid by a fixed repayment schedule in regular installments over a specified period. A royalty-based repayment structure may be used. The provider receives a percentage of the revenue generated from the campaign. Depending on performance metrics, funding may be tied to achieving predetermined goals or other KPIs. A PR campaign may require a one-time lump-sum repayment on a specified due date, along with interest or fees. PR funding can be repaid with equity or company ownership stakes.

How do I choose the right PR funding option for my business?

You should start by evaluating your business' PR campaign funding needs, taking into account the financial situation and goals. Determine what funding your business can qualify for, assessing each funding option carefully, and consider then whether you can meet the requirements for these. Be sure you consider the campaign's specific objectives, the estimated costs, and timeline. Review and compare the costs, terms, and conditions of each option, including interest rates, fees, repayment schedules, performance-based obligations, and any equity stakes.

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