Reddit reviews Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist

https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalist/dp/1119594820/ref=dp_ob_title_bk

Is probably the standard intro text.

There are several "phases." It varies from company to company but generally looks like the following:

1. Friends&Fools ~ just enough to keep going (super early stage)
   
2. Angel investors* ~$10k-200k (proof of concept, possibly a few rounds)
   
3. Series A ~2m-10m (enough to become a real company or die trying)
   
4. Series B ~20m-50m (not ready for exit** stage, but growing quickly)
   
5. C/D/E/F... ~50m+ (large valuations up to billions, how attractive can you make the exit before you run out of money)
   
   You want each round of funding to be at a higher valuation than the last, that way each previous investor can claim a better and better balance sheet and the company gets increasingly large injections of cash to fuel growth (you get your next round of investors on growth).
   
   If subsequent rounds are valued less than before, previous investors (and founders) get screwed and lose a lot of control + ownership. But at that point it is usually preferable to getting no money and going out of business (most startups have large burn rates and not a good monetization strategy).
   
   Each round founders and previous investors give up some control of the company to new investors. So early investors usually have the right of first refusal. They can continue to invest in each round and keep their control for additional money.
   
   I cannot stress how hype driven this is. When a company seems great, everyone wants in. If a company seems to be struggling, it becomes hard to raise money very quickly).
   
   This is why you see successful startup CEOs are often natural hype machines. Its a necessary survival skill. Technical and personal skills are somewhat less so
   
   ​
   
   *Could also be known as seed phase
   
   ** Exit means buyout by larger company, like Google. Or an IPO on the stock market. This is where investors make back money, in theory
   
   More info: https://www.investopedia.com/articles/personal-finance/102015/series-b-c-funding-what-it-all-means-and-how-it-works.asp
   
   If you really want a good guide book, I would suggest this one: https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalist/dp/1119594820/ref=sr_1_2?keywords=venture+deals&qid=1571807378&sr=8-2
   
   Not particularly useful if you are just casually curious, but if you want the nuts and bolts on how the process works, its a good one.