Launch Phase

~Series A (second round) financing~

This information is provided for general informational purposes only and should not be relied upon as legal interpretations by the Office, shall not supersede any part of the Florida Statutes or Florida Administrative Code, and does not constitute legal or financial advice. The Office does not endorse any third-party or guarantee the accuracy of any third-party information linked to or referenced herein.

The launch phase is the stage where businesses launch and begin operations. Businesses in this phase will have formed a team, conducted initial market research, and developed a minimum viable product to begin operations. An initial customer base will serve to validate the company’s business model, target market, and costs. 

Financing in the launch phase is typically called Series A financing. Series A funds are often used for operational and development costs. 

Business Revenue

Also known as ‘retained earnings’, companies can use their revenue to invest back into the company for future development and expansion. Before using business revenue, consider the following:

  • Are the business operations and infrastructure established?
  • Does the business have sufficient cash flow and profitability?
  • Does the business have any outstanding debt?
  • Does the business anticipate additional or immediate expenditures?


Personal Savings Funds

Entrepreneurs can utilize their savings to help fund their business endeavor, otherwise known as "bootstrapping." Before using personal funds, consider the following:

  • Can you afford to lose personal funds?
  • Are you putting your dependents or loved ones at risk by using personal savings?
  • Do you have outstanding personal debt or other liabilities that must be addressed?
  • How do you plan to replenish savings if they are lost, or the business fails?
  • Will you be able to manage the emotional toll of losing your savings?


Friends, Family, and Fans Donation Campaigns

Soliciting family members and close friends for donations is a common starting place. Before making donation solicitations, consider the following: 

  • Do you have a good network of family and friends willing to donate to your efforts?
  • How will soliciting donations affect family and friend relationships?
  • Will your donors expect ongoing communication and reporting?
  • Can you afford additional time and effort to conduct a donation campaign?


Research and Business Grants

Various grant funding opportunities are available from state and federal government as well as some private organizations. Most grants are directed towards non-profit organizations, and research and innovation efforts. Before applying for a grant, consider the following:

  • Do you understand the terms and requirements of the grant?
  • How must the grant funds be utilized?
  • Do you have the additional time and effort for the application and reporting requirements?
  • Does the grant align with your business plan?

Personal Credit Cards

A personal credit card can be a tool for helping entrepreneurs finance initial up-front costs.

Before using your credit card, consider the following:

  • Can you afford to pay off the credit card balance in a timely manner?
  • Are you willing to have your personal credit score affected?
  • Do you have a good credit history?
  • Do you have a plan for separating personal charges from business charges?
  • Do you have a business bank account established?


Business Credit Cards

Business credit cards can help finance initial startup costs and offer perks or terms conducive to business operations. Before using a business credit card, consider the following:

  • Are you fully understand the terms being offered?
  • Are you willing to have your credit score affected?
  • Do you or the business have a good credit score and credit history?
  • Has the accounting infrastructure for your business been established?
  • Do you plan to have multiple credit cards, i.e., for your business employees?


Personal Lines of Credit

Financial institutions offer lines of credit to entrepreneurs to help finance initial business costs.

Before applying for a line of credit, consider the following:

  • Do you have a good credit score?
  • Do you understand the terms of the loan and repayment schedule?
  • Do you have the appropriate qualifications for approval?
  • Are you willing to have your credit score affected?
  • Has the accounting infrastructure for your business been established?
  • Will your business be able to afford timely repay the loan?


Early-Stage Community Business Loan

Some lenders partner with state or federal government community programs to offer loans to qualifying early-stage businesses. Often, these programs are designed to provide access to startup capital to underserved communities and have specific eligibility requirements. Before meeting with a lender regarding an early-stage community business loan, consider the following: 

  • Can the business afford to take on debt?
  • Do the projected financial statements reflect the ability for the business to repay the loan?
  • Are you willing to have your credit score affected?
  • Are you willing to offer personal assets or a personal guarantee as collateral for a loan?
  • Do you have a business plan and financial projections to share with potential lenders?
  • Will defaulting on a loan affect the performance of the business?

Investment Crowdfunding

Investment crowdfunding is raising a small amount of capital from numerous non-accredited or accredited investors. Investors will typically want to see financial statements that show revenue flow and the potential for future profits. Before conducting a campaign, consider the following:

  • Is investment financing appropriate for the long-term growth plan of the business?
  • Can the business afford the operational and transactional costs?
  • Can the company afford the additional time and compliance efforts?
  • Can you afford to manage a large number of investors and investor expectations?
  • Does the business have a consumer or online following to market the offering to?
  • Is management willing to surrender equity in the company?
  • Do you understand the future implications of equity dilution in the company?


Angel Investors

Angel investors, or high net-worth individuals, look to invest early in high-potential business endeavors. Investors will typically want to see financial statements that show revenue flow and the potential for future profits. Before seeking capital from angel investors, consider the following:

  • Is investment financing appropriate for the long-term growth plan of the business?
  • Does the business have an appropriate valuation to issue equity or debt?
  • Can you afford to manage investor expectations?
  • Is management willing to surrender equity in the company?
  • Has the company considered the future implications of surrendering equity in the company?
  • Is the company prepared to comply with securities regulation and reporting/disclosure requirements?
  • Can the company afford the legal cost of raising investment capital?
  • Does the business performance or initial market research reflect revenue flow and the potential for future profits?
  • How will the business plan provide liquidity to investors?
  • Does the business have a viable exit strategy?
Other Considerations

Here are some other considerations when deciding on financing in the idea phase:

  • Businesses in their early stages have the highest financial risk to lenders and investors.
  • Pre-revenue companies may not qualify for loans or investment funds.
  • Institutional lenders and investors typically want to see financial statements that show revenue flow and the potential for future profit.
  • Some professional investors may want to invest in newly operational companies; however, being able to demonstrate revenue generation will be helpful. 
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