Let’s talk Fundraising Stages.

When and why founders raise capital is unique to their own startups. 

Typically, founders raise to either: (i) stay liquid, or (ii) take a minimum viable product (MVP) to market, or (iii) rapidly scale. 

On countless occasions, founders have told me that they’re looking for not just the money but the experience, knowledge and contacts that come with investment.

Whatever you’re seeking, it really helps to have a high-level understanding of the stages in capital raising. 

Pre-Seed = Belief Capital

Typical Deal Size: $50K – $250K

Founders are still working independently or with a small team, and are yet to develop a prototype or proof-of-concept. Pre-seed funding often comes from family and friends, occasionally from an incubator or accelerator program or perhaps an angel investor.

Seed = Proof Capital

Typical Deal Size: $250K – $1M

As a startup works through the problem solving phase and identifies potential market fit for their proposed product, seed capital funds further development. Seed funding can come from angel investors or VC funds focused on early-stage investments.

Series A = Scale Capital

Typical Deal Size: $1M – $5M

This round kicks in after a startup has obtained some product traction and user base, and has demonstrated potential for exponential growth through revenue, KPIs, or other metrics. The money raised in this round often comes from angel investors or VC funds and can be used to scale internationally, improve and optimise product, add to operational capability, and increase customer acquisition.

Series B = Scale Capital

Typical Deal Size: $5M – $20M

This round of funding is used to increase market share, grow the team and continue expansion. Series B funding often comes from VC funds and often from the same investors who led the previous round. It may also attract investments from later-stage VC funds.

Series C and beyond = Exit Capital, Pre-IPO

Further funding rounds are designed to continue scaling the company, whether by developing new products, making acquisitions, increasing market share, expanding internationally, or preparing the company for exit. Funding rounds Beyond B generally come from large VC funds, private equity firms, hedge funds and investment funds.

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