Investments in companies are usually at a set price.

These priced funding rounds are typical for a company which is already after the early stage seeded investment rounds. These price rounds are a more conventional way to invest in a company. The opposite is an unpriced round, but we'll see that in just a moment. The startup company agrees to valuation with investors, and the investors can then purchase shares at a price determined by that valuation.

Once a company has moved beyond pre-seed or seed stage i.e., it's now generating sales and profits. Priced rounds are the conventional way to invest in the company. However, if a company is very early stage, it may not be possible to agree a valuation for the company, in which case an unpriced round is suitable for very early stage investing. The startup company is not given a valuation because it has no revenue, no profits, and no cash flows. What could we base a valuation on? However, some investors are still keen to provide capital to help grow the business in return for equity at a future date. So this is the unpriced round. Investors are not purchasing a known amount of equity shares now. So to conclude, a priced round is an agreement to purchase equity for a predetermined price. Investors will receive equity equivalent to the money invested at the time of investment, whereas an unpriced round happens in the very earliest stages of a company. An investor is willing to make a cash investment and will accept some equity in the company, in the future, not at the time of investment. As we see with the priced rounds. So the unpriced round will see investors get their shares in the future. The exact quantity of equity shares that they'll get will be determined at that later date.

Typically, VC funds invest in priced investment rounds. This is where the company has agreed valuation and is now seeking investors, or an investor is going to contribute additional capital in return for an equity stake to help the company grow.

Usually, a company has had a series of earlier funding rounds already seeking pre-seed and seed investment from friends and family and early stage angel investors, Plus any early stage VC investors.

So if further investment capital is required, this is when VC invests. It's typically what's known as Series A funding rounds. It's known as series A as this is the term given to the type of stock issued in the funding round i.e. A shares to avoid control being diluted in the company. The series A shares issued are usually preferred shares. Once startup companies are established and generating sales, it is unlikely that the early stage founders will want to see their ownership diluted by new investors at the Series A stage. Thus, preferred shares are convenient in later funding rounds, such as Series A. As they do not offer voting rights, startup companies may raise more than one priced round of preferred shares. Series A preferred stock is a classification of a stock that gives the VC fund specific rights that are separate from those of common stockholders, which are usually the founders. When a company issues shares of preferred stock, it does so in a series. For example, series A preferred stock would be the first preferred stock issued, and then either series A one or series B would be the second. And so on. Each round of preferred stock has its own set of holding rights, which may be completely different than that of the series before and after it, the series A preferred stock investors have some of the most favorable rights because it is the first group of preferred shares issued.