How Funding Works

Those who are not well versed with the StartUp world, few fund related terms may seem confusing. These rounds of fundings are necessary investment for a StartUp who has decided not to bootstrap (surviving on the depth of own pocket or the generosity of family and friends) any further.
Before the start of each round, the company valuation is realised. The amount of money to be raised from each round is based on this valuation.
Lets take a look at what does each round mean.

Infographic showing what each round of funding is meant to be used for and its results when the startup succeeds or fails

Each round of funding works in a basic manner: the investors offer cash in return for equity stake in the business. The investors nurture the idea to come to fruition. The investment risk is high, but where there is no risk there is no gain either. How do investors deal with failed investments? They cancel it off with a few successful investments. And thus the game keeps continuing!

Credits:
Information Credit: http://www.investopedia.com/articles/personal-finance/102015/series-b-c-funding-what-it-all-means-and-how-it-works.asp

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