The essence and features of financing startup enterprises

: pp. 123 - 130
Lviv Politechnic National University
Lviv Polytechnic National University, Ukraine

The current state of development of Ukraine’s economy requires solving the problems of intensifying entrepreneurial activity, including in the form of startups. The results of the analysis of existing scientific works and practical materials made it possible to clarify the essence of a startup, which should be understood as the process of creating and bringing to the market an innovative product which requires attracting financial resources to promptly solve specific problems under conditions of high uncertainty. Whereas an enterprise that will be engaged in the implementation of this process should be called a startup enterprise.

One of the key obstacles to the development of startup enterprises is the limited financial resources, which requires attracting external financing. The results of studying the literature allowed to identify the basic stages (rounds) of financing the activities of startup enterprises, namely: Pre-seed round, during which a startup enterprise starts its activities (at this stage, startup enterprises are valued at $10 thousand to $100 thousand, and their projects can receive funding of up to $50 thousand); Seed round, during which startup enterprises are able to cover the necessary costs of creating an innovative product, preparing marketing tools, forming a team of employees and conducting further market research (at this stage, startup enterprises are valued at $3 million to $6 million, and a promising startup project can receive funding in the amount of

$50 thousand to $3 million); Series A financing round, where a startup company must have a developed product and a customer base with a constant revenue stream (at this stage, startup companies worth $10 million to $30 million, that have a sound business plan can raise up to $10 million); Series B financing round is for startup companies that have passed the previous three financing rounds, have a sufficient customer base with a recurring revenue stream and have proven to investors that they can succeed on a larger scale (at this stage, startup companies worth $30 million to $60 million can raise up to $30 million); Series C financing round is for startup companies seeking larger amounts of funding to create new innovative products, enter new markets, and acquire other inefficient startups in their own or related industries (at this stage, startup companies with business growth worth $100 million to $120 million can raise up to $50 million); Series D financing round allows entrepreneurs to raise funds to solve problems in a special situation (the value of startup companies at this stage can be estimated from $150 million to $300 million, and they are able to raise up to $100 million); initial public offering (IPO), which growing startups in need of funding often use to raise funds, while established successful organizations use it to allow owners of startups to sell shares to the general public and thus partially or fully divest themselves of ownership.

  1. Sysoyev, Ye., Sychikova, Yu., & Torchylo, T. (2022). DealBook of Ukraine. Retrieved from:    (Access:    08.09.2022).
  2. Kreston Ukraine, UVCA, AVentures, & ISE Corporate Accelerator (2022). Ukraine Deal Review 2021. Tech Venture Capital and Private Equity deals of Ukraine. Retrieved from: review-2021-tech-venture-capital-and-private-equity-deals-of-ukraine    (Access:    08.09.2022).
  3. Polishchuk, V. V. (2018). Startap proekty ta yikh otsiniuvannia: konspekt lektsii dlia studentiv za spetsialnistiu 7.121 “Inzheneriia prohramnoho zabezpechennia” fakultetu informatsiinykh tekhnolohii UzhNU [Start- up projects and their evaluation: a summary of lectures for students in the specialty 7.121 “Software engineering” of the Faculty of Information Technologies of UzhNU]. Uzhhorod: UzhNU.
  4. Pahwa, A. (2019). What Is A Startup? Feedough, April, 30. Retrieved from: is-startup (Access: 08.09.2022).
  5. Mrykhina, O. B., Stoianovskyi, A. R., & Mirkunova, T. I. (2015). Perspektyvy startap-kompanii u konteksti konkurentospromozhnoho rozvytku ukrainskoho rynku vysokykh tekhnolohii [Prospects of startup companies in the context of competitive development of the Ukrainian high-tech market]. Aktualni problemy ekonomiky [Actual economy problems], 9, 215–225.
  6. Ries, E. (2011). The Lean Startup. How Constant Innovation Creates Radically Successful Businesses. Edmonton: Portfolio Penguin.
  7. Kasych, A., & Dzhura, A. (2019). Startapy yak forma pidpryiemnytskoi diialnosti: poniattia, znachennia, zarubizhnyi dosvid [Startups as a form of entrepreneurial activity: concept, meaning, foreign experience]. Investytsii: praktyka ta dosvid [Investments: practice and experience], 2, 24-31.
  8. Rud, N., & Hordiichuk, A. (2019) Ekonomika ta orhanizatsiia innovatsiinoi diialnosti [Economy and organization of innovative activity]. Lutsk: IVV Lutskoho NTU.
  9. Why do startups fail? CBinsights. Retrieved from: reasons-top/ (Access: 09.09.2022).
  10. Sajid, A.   (2021).   Startup   Funding   Stages   You   Should   Know   About. Сloudways.   Retrieved from: stages/?data1=18059204527&data2=&id=290872&gclid=CjwKCAjwvNaYBhA3EiwACgndgss9uy9n CauuMWz1QGYHaXQvOxJzw0yYqdziYuhk2AqwFRepyWhiLRoCswUQAvD_BwE#pre-seed        (Access:  05.09.2022).