The principal benefit of having an early-stage fund in your capitalisation table is that it can help your startup to raise investment. An early-stage fund investor represents an important vote of confidence in your business. It tells other potential investors that your early-stage startup has been successfully vetted and qualified by a specialised fund. This encourages both existing and potential equity holders to invest more because they perceive less risk. 

Investment is important to the founder of an early-stage startup because it pays for the team, the infrastructure, and the prototypes that are needed for them to grow. To a business angel, early-stage investment is important because it allows them to obtain a significant equity stake at a low valuation. This gives them the ability to influence the direction of the startup and by extension the outcome of their investment.

Building a business around monthly recurring revenue (MRR) makes growth more predictable, and provides investors with a useful metric for understanding trends in profitability and cash flow. This makes the MRR business model popular with technology startups that offer software as a service (SaaS). 

Seed investment took a hit during the Covid 19 pandemic, with business angels and venture capital funds (VCs) electing to put more of their capital into late-stage startups such as unicorns with valuations over $1 billion, according to Crunchbase.

As the pandemic recedes, it is becoming clear how profoundly Covid has accelerated digitalisation across the global economy. Covid has created an ideal environment for fintech companies to grow exponentially and deliver strategic valuations for their investors.

The journey from investing in a promising startup to exiting with a high return on investment (ROI) requires close monitoring every step of the way.