Funding round

A funding round is a single event in which a private company raises money from investors by selling them new shares. Startups typically raise in a series of rounds as they grow, often labeled seed, Series A, Series B and so on, with each round usually bringing in more money at a higher valuation.

Each round sets a price per share, which implies a value for the whole company. Because private shares don't trade on an exchange, that round price is often the only recent estimate of what the company is worth, and investors who already hold shares use it to mark the value of their stake.

For public company investors, this matters when a listed company owns a stake in a private one. A new round at a higher valuation can let the owner book a gain on paper, with no cash changing hands and no public market price behind it. The next round can just as easily come in lower, so gains set by funding rounds deserve caution until the stake is sold or the company lists.