Venture capital funds that provide seed capital invest in companies that are in the early stages of their development. Investors know that only 20% of invested companies will survive to the next funding round. The second round is carried out by another investment fund or a syndicate of funds, which takes the lead in the process. To compensate for the high risk, the Seed Capital Fund always requires a very high percentage of its participation in the company, conducts financing in several rounds, and also appoints managers and employees of the firm at its discretion.

Funding for an expansion company
The first round of funding allows the company in the expansion stage to begin full-scale production of the product, establish sales and enter the market.
The second round allows a company that is already selling its product to hire an additional number of new employees - marketing, sales, engineers. Because many expansion stage companies are not yet fully profitable, they often use capital injections to cover negative cash flow.

The third round or mezzanine financing allows for a significant expansion of the company, including an increase in production space, additional marketing research, and the development of a new product. At this stage, the company is breaking even or already making a profit.