An ‘external round’ refers to a round of funding in which a start-up raises capital from external investors. These include, amongst others, venture capital firms, business angels, corporate venture capital firms and other institutional and private investors.
The aim of an external funding round is to provide the company with additional capital in order to accelerate growth, product development and market expansion.
Typical types of external investors include:
- Venture capital funds
- Business Angels
- Corporate Venture Capital (CVC)
- Family Offices
- strategic investors
An external round is often used for:
- Scaling the business model
- Product Development and Innovation
- Market entry or international expansion
- Building teams and structures
- Marketing and sales activities
The advantages of an external round are:
- Access to more growth capital
- Accelerating business development
- Building a strong network of investors
- strategic support from experienced investors
- Validation of the business model in the market
At the same time, an external round also means:
- Dilution of existing shareholders’ stakes
- stricter requirements regarding reporting and transparency
- higher expectations regarding growth and scaling
For start-ups, the external funding round is a key step in the financing process, enabling them to move from the early product stage into the growth phase.
innoWerft helps founders prepare for funding rounds, develop compelling investor pitches and identify suitable investors, so that they can carry out successful external funding rounds in a structured manner.