Definitions

Startup
A startup business is one that is in a purely conceptual phase, product development has not begun and the company does not have sales or revenue.  Financing for this business stage is referred to as the seed round.

Product Development
Companies in the product development stage are currently developing one or more products or services, but have not yet begun selling or shipping any product or service.

Beta Test
For many information technology companies, this is an intermediate stage, when the company is still in the product development stage, but prototypes have  been created and are being tested in the field by select customers prior to market introduction.

Shipping Product
The shipping stage begins when at least one revenue-generating product or service is being sold and shipped or installed.  Other products and services may still be in development or beta test.  At this stage, the company begins to have sales and revenue though, initially, costs usually exceed revenue and cash flow continues to be negative.

Profitable
The profitable stage indicates that the company is shipping products or providing services from which it derives revenues, and the company has reported that it is profitable.
 

    Usually, different types of investors participate at the various stages of a company's development:

Seed rounds are initial financing rounds (investments) in companies in the start up stage.  The founders and product developers such as engineers are usually on board, but the management team is usually partially in place.  Most investors in seed rounds are founding management, and their friends and family.  Sometimes, other individuals with available capital also become investors. These other individuals are often referred to as angel investors.

1^st Round, 2^nd Round are post-start-up investments providing additional financing rounds as needed during the Product Development, Beta Test and early Shipping Product Stages. Certain Capital Providers concentrate on these early stages and invest only at these stages.

Later Rounds (3^rd and higher) are private equity capital raising financings during the Shipping Product or Profitable stages. Many Capital Providers invest only in these later stages and not in earlier stages.