5 Stages of Venture Capital Financing: Explained [2023] (2024)

At the fourth stage of venture capital, the real progress begins. With a strong foundation now set, additional funding can be put towards developing new products, growing into other markets, and maybe even purchasing competing startups. It takes a fast-growing company about two to three years to reach expansion stage, where it is producing exponential growth and stable profits.

You must have a solid customer base and a proven track record before securing stage 4 and ensuing funding. On top of that, you also need the following:

• Consistent income
  
• A history of expansion
  
• Plans for international growt

Investors are keener to get involved after stage 4 when your attainment makes their investment less risky. At this stage, investors outside of typical venture capital organisations, for example, hedge funds, investment banks, private equity organisations, and so on, are increasingly eager to put money into the company.

Regarding venture capital, stage 4 receives over 80% of all funding, which is why it's called the expansion stage.