Late-stage companies have moved beyond the early phase of development and have rapidly growing sales—or have fast growth potential. For investors, late-stage investment is less risky because the companies are more established in the marketplace and their investments can be converted more quickly into cash.
For example, a Canadian software company generating $8 million in annual recurring revenue is considered a late-stage startup, attracting growth equity investors who offer $15 million to fuel enterprise sales expansion — at this stage, risk is lower and investor return timelines are shorter than early-stage deals.
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