Key takeaways
- Each round should buy a clear milestone that makes the next round easier.
- Investors at each stage look for different proof: team, then product, then repeatable growth.
- Stage names are loose; what matters is the evidence you have.
Why stages exist
Startups raise money in steps. Each round funds the work needed to reduce the biggest risk at that moment and reach a milestone that justifies a higher valuation next time.
Pre-seed
Used to build an MVP and find first users. Money usually comes from founders, friends and family, angels, accelerators and some pre-seed funds. Investors mainly bet on the team, the problem and early signs of demand.
Seed
Used to reach product-market fit and early, consistent traction. Investors are angels, micro-VCs and seed funds. They want to see real users, early revenue or strong engagement, and a believable path to growth.
Series A
Used to scale something that already works. Investors are institutional VC funds. They look for a repeatable go-to-market motion, healthy unit economics, strong retention and a team that can scale. Many startups need a year or more of strong growth after seed to be Series A ready.
How much to raise
A common rule is to raise enough for 18–24 months of runway to hit the milestones for the next round, with a buffer. Founders at seed often sell 10–25% of the company per round, but this varies widely by market and sector.
Alternatives to equity
Not every business needs venture capital. Consider grants, cloud credits, revenue-based financing, customer pre-payments and bootstrapping. Non-dilutive money is often the best first money. Browse grants and competitions.
This guide is general information, not legal, tax or financial advice. Rules and programme terms change, so check official sources and speak to a qualified adviser before making decisions.