Which stage of financing for a startup typically involves financing from family, friends, and fools?

The stage of financing for a startup that typically involves funding from family, friends, and "fools" is known as seed capital. This stage is fundamental for early-stage startups as it provides the initial funds necessary to develop a business concept, create a prototype, or conduct market research.

Seed capital is often characterized by relatively small amounts of money raised in exchange for equity or convertible notes. This type of financing is crucial for entrepreneurs, as traditional funding sources may be hesitant to invest in very early-stage companies that require more validation.

Family and friends are often among the first to provide financial support due to their personal connection to the entrepreneur and trust in their vision, even without substantial evidence of market potential. The term "fools" humorously refers to people who might not have a direct connection to the entrepreneur yet are willing to take a risk on an unproven idea.

Angel investing typically occurs after the seed stage, where individuals with higher net worth invest in startups, providing larger amounts of funding in exchange for equity stakes and often leveraging their expertise and network to assist the startup.

The first stage venture capital (VC) involves institutional investors who provide capital once the startup has validated its business model and is ready for more substantial growth, while mezzanine