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We talk a lot about venture capital in the news-about-the-news conversation. We hear of:

  • Media companies and tech companies buying small startups.
  • New companies emerging across different ways of consuming and creating news.
  • Certain startups enjoying giant fundraising rounds.

But what does it mean to actually go through the life of a startup?

There is no cookie cutter way that a startup goes about raising money, but here is a quick guide to figuring out what all the terms from Angel to IPO actually mean.

A basic reminder is that venture capital is not free money, even though it sometimes seems like that. In exchange for this money, VCs get shares of the firm (an ownership claim), which has the effect of diminishing the funders’ stake. And it might mean that VCs get more control over the company’s direction, which could be a good thing if a company is having trouble managing money (for instance), but could prove challenging, especially if a VC is less risk averse or has a different vision for innovation.

One more clarification: Venture capital can come from either institutional investors — the names Sequoia Capital, Union Square Ventures and Andreessen Horowitz may ring a bell — or from individual investors like Yuri Milner or Sean Parker, who both invested in Facebook and have their hands in many new startups.


Angel round. This is where individual investors give you money. These investors range from friends and family of the founder to entrepreneurs unattached to a firm taking a risk on a small company. Each investment amount ranges from $5,000 to $500,000, but could go as high as $1.5 million.

Seed. Similar to an angel round, this usually involves institutional investors, or entrepreneurs throwing more money into the game. You might see companies investing between $150,000 and $2 million. This could also be your very first round of investment.

Series A round. Here you likely have a team and working prototype, though in some cases you may have a really tempting idea. Generally some sort of proof of concept is needed and an initial promising launch of a project. You’re raising $3 million to $10 million.

Series B round. Now things are starting to look really good: you’ve got your startup running and you are growing and fast. Your product is taking off and you need to raise more money to expand. You’re raising $10 million to $30 million.

Series C round (and beyond). You need more money because you’re continuing to do well, and you need to keep growing.

IPO. An IPO (initial public offering) is essentially another funding round. An IPO, though, gives you an opportunity to raise even more funding than would be possible through a venture capital firm, even though you are still selling to institutional and individual investors (just more of them). You are promising to be far more transparent since you’ve got to file public documents about the state of your financials.

Acquisition. At any point, a larger company may buy a startup. Usually this happens before a company has raised too much venture money to keep the cost of acquisition “reasonable” (VCs should and will get their investments back). But as we have seen, with the purchase of WhatsApp, $19 billion from Facebook was not too much for an acquisition. At the time, WhatsApp was in its Series C round, having raised about $50 million.

These are rough estimates of numbers. Certainly companies can jump from a seed round to Series B financing, get a really huge amount of startup capital, or get seed funding and not need to raise more money for a while. Even a $12 million round might in some cases be considered a Series C round. And if a company keeps getting money, but in roughly the same amount, each investment still may be considered a new round of funding.

There are a few other terms to know. A “growth” round typically refers to a Series C or later round. A company that is doing just OK but still looks promising may receive a “mezzanine” round before it gets to the next stage of funding. This round may not increase the value of the company or may involve selling shares for less money than they were worth before. A “recapitalization” is not so good: you would start to see your stake beginning to significantly diminish.

News companies

Let’s take a look at the funding behind some of the companies you may be familiar with given their buzz. All of this is current via Crunchbase.


Circa is basically still in seed funding. It has received $5.7 million in nine rounds, but all of these have essentially been seed rounds (some of these rounds have been convertible notes, where investors loan money to a startup and in return, get preferred shares of stock in the company rather than their money back. It’s a little hard to actually tell how much Circa has on hand because some of the funding rounds have been undisclosed amounts. Still, there are some good investors putting their faith in Circa, like Matt Mullenweg and Lerer Hippeau Ventures (the first funders of The Huffington Post). And don’t forget, Ben Huh of LolCat fame co-founded the company.


Newsy, the homegrown video curation company born in Columbia, Missouri, initially raised $2 million in seed funding from undisclosed investors. It was then acquired by E.W. Scripps for $35 million in cash (nice job, Newsy).


Buzzfeed has a total of $96 million to play with so far (which sets up big expectations, too, lest we forget).  It’s in its Series E funding, recently boosted with that $50 million round from Andreessen Horowitz (Marc Andreessen is responsible for Netscape and is a true Internet pioneer). It’s also gotten money from Lerer Hippeau Ventures, which makes sense since the company was essentially a baby of Huffington Post. Interestingly, Hearst Ventures, a venture capital arm of Hearst, has invested in Buzzfeed too. Now that’s a bit surprising (and underreported). Not a bad move, Hearst. Buzzfeed has also acquired a few companies along the way, including Yoke, a Facebook dating app. Hmm.

Business Insider

On hand is $30 million, with a nice recent round of $12 million. Big names are behind the company, but the big rounds are also full of individual investors too. Jeff Bezos is an investor, as is Ken Lerer and Marc Andreessen. Be bullish on Business Insider, which former editor Joe Weisenthal called a leader in “speed” on the Web above all else at a recent forum I attended in New York hosted by the New York Daily News.


Vice has an interesting story. It’s not truly a new startup. This is because it began as a Canadian print magazine in 1994. But the company acts like a startup thanks to its ambitious news content and its leadership in video on the Web. It really is a darling of investors, raising $580 million. Notably, this investing has been from private equity not venture capital funds. The difference is a little muddy and confusing (just Google it and you’ll see what I mean), but I’ll try. No, I’ll quote Forbes: “Private equity is usually about taking an existing company with existing products and existing cash flows, then restructuring that company to optimize its financial performance.

The author of the article, Victor Hwang, gives a nice chart comparing the worldviews of PE and venture. He calls venture capitalists “crazy people.” But Vice wasan existing company, so private equity funding does make sense given its history. We focused so much on the Buzzfeed funding round that we forget the really big player in the funding game (even if it isn’t VC money) might well be Vice. Pay more attention.

Vox Media

Let’s remember that Vox Media is an empire of content sites, from The Verge to SB Nation to Curbed to Vox and others. It has $106.7 million on hand from seven rounds. Notable investors include Comcast Ventures, the venture arm of Comcast (which says a lot – Comcast investing in content, not infrastructure). Accel Partners is another well-known firm. And Ted Leonsis is an investor too — he owns the Washington Wizards basketball team and the Washington Capitals hockey team. He also is behind Groupon, so he doesn’t mess around. Vox Media recently raised $46.5 million and now has a valuation of $380 million.

This is just a brief portrait of a few companies that have piqued my particular interest, and I’ve been able to talk to at least a few of these companies for my research for the Donald W. Reynolds Journalism Institute. Stay tuned for the next iteration of this work in an upcoming academic report, where I’ll provide more of the specifics about actual individual company strategy, as these companies are not particularly pleased with the idea of a blog post about them.

Nikki Usher  
Nonresidential fellow


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