Startup funding stages guide: From pre-seed to IPO
If you're considering launching a business, scaling your company, or expanding into new markets, you'll likely need external funding at some point. Understanding your financing options and the distinct stages of startup funding is crucial to your fundraising success. In 2023 alone, early-stage funding represented 80.7% of all disclosed venture capital (VC) deals.
Each startup funding stage—pre-seed through IPO—has its own characteristics, investor expectations, and financial benchmarks. Having supported startups in raising over $3 billion, we’re here to demystify the fundraising journey, helping you navigate the stages effectively.
Pre-Seed Funding
Pre-seed funding is typically the first round of equity financing for startups, primarily supporting entrepreneurs with just an idea, initial team, and market research.
Uses of pre-seed funding include:
Hiring essential team members (product, marketing, etc.)
Idea validation and proof of concept
Development of MVP or prototype
Covering basic operational costs (office space, tools, administration)
Valuation & Amount:
Valuations range from $1M to $10M (pre-money).
Investment sizes vary from $30,000 up to $5M, depending on market, industry, and team experience.
Pre-seed capital ideally lasts 12-18 months.
Typical Investors:
Angel investors
Accelerators and incubators
Early-stage VC funds
Funding Instruments:
Qualified equity rounds
SAFEs
Convertible notes
Seed Funding
Seed funding marks the first substantial investment, enabling startups to transition from concept to fully operational businesses.
Purpose:
Product development and refinement
Achieving product-market fit
Business model validation
Initiating revenue generation through marketing and sales
Team expansion
Financial benchmarks:
Seed valuations typically range from $1M to $15M.
Investors typically receive between 15%-35% equity.
Average seed funding amount in 2024: approximately $3.5M.
Runway: 12-24 months.
Typical Investors:
Angel investors
Venture capital firms
Occasionally, investors from previous rounds
Series A Funding
Series A funding significantly scales startups, aiming for substantial revenue growth and market presence.
Objectives:
Improving core products/services
Accelerating sales and marketing efforts
Building strategic partnerships
Enhancing operational efficiency
Financial benchmarks:
Valuations range from $10M to $45.5M.
Average funding amount in 2024: approximately $21.2M.
Equity given: typically 15%-30%.
Runway: 12-20 months.
Expectations from Investors:
Clear product-market fit
Consistent customer and revenue growth
Strong unit economics
Strategic partnerships and clear exit strategy
Series B Funding
Series B funding signifies substantial growth potential, supporting startups aiming for market leadership and expansion.
Goals:
Dominating market share and category leadership
International expansion
Enhancing profitability
Significant product improvements
Financial benchmarks:
Valuations typically between $50M and $105M.
Average funding amount in 2024: approximately $38.9M.
Equity given: typically 10%-25%.
Runway: 18-24 months.
Investor Expectations:
Robust revenue growth ($2M-$10M+ ARR for SaaS)
High customer retention and strong customer acquisition economics
Market penetration and brand recognition
Successful expansion into new markets
Series C Funding
Series C funding prepares companies for substantial market dominance and potential exit strategies, including IPOs.
Purpose:
Further market expansion
Product diversification
Achieving profitability
Financial benchmarks:
Valuations range from $100M to $250M.
Average funding amount in 2024: approximately $37.4M.
Runway: minimum 18-24 months.
Investor Expectations:
Proven revenue model and sustained growth
Clear pathway to profitability
Established market position and mature product
Later-Stage Funding (Series D, E, F, G)
Later-stage funding supports mature startups that dominate significant market shares but haven't reached IPO-level growth. These rounds often indicate ongoing expansion or preparation for exit strategies.
Initial Public Offering (IPO)
Going public via IPO represents the ultimate milestone, allowing companies to access public markets for capital. It’s a significant indicator of long-term success and investor exit opportunities.
Fundraising doesn't have to be daunting. Having helped startups raise significant funding, we're here to guide you through every step. Whether you're preparing your investor strategy, refining your pitch deck, or navigating investor outreach, our resources and expertise are tailored to support your fundraising journey.
