Startup Funding Stages: From Pre-Seed to IPO
Startups typically raise money in stages: pre-seed and seed to find product-market fit, Series A to build a repeatable growth engine, Series B and later to scale, and sometimes an initial public offering (IPO) when shares are first sold on a stock exchange. Each stage is defined by the evidence you have, not by the amount raised.
By Javier Alonso, Founder & CEO. Updated .
Bootstrapping and friends and family
Many startups begin with the founders' own money, revenue from early customers or small amounts from people they know. Bootstrapping keeps full ownership and control, and some companies never raise outside money at all.
Pre-seed and seed
Pre-seed funds the team and the insight, often before revenue, to build an MVP and gather first evidence. Seed funds early traction: real users or revenue and signs of a repeatable channel. Investors at these stages include angels, accelerators and seed funds. These rounds are often raised on convertible instruments such as SAFEs or convertible notes rather than priced equity. See pre-seed vs seed funding.
Series A
Series A is usually the first large priced round led by a venture capital firm. Investors expect clear evidence of product-market fit and a growth engine that turns money into customers predictably, shown through metrics such as MRR growth, retention and CAC.
Series B, C and beyond
Later rounds fund scaling: larger teams, new markets, new products and sometimes acquisitions. Investors focus on efficiency and market position. Growth equity and, eventually, private equity investors may join at these stages.
IPO: initial public offering
An initial public offering is when a private company first sells shares to the public on a stock exchange. It raises capital and lets early investors and employees sell shares, but it brings heavy regulatory, reporting and governance requirements. Most startups never go public. Being acquired is a far more common outcome for those that succeed.
Dilution
Each round usually means issuing new shares, which reduces existing owners' percentage. That is expected. The aim is for each round to increase the company's value enough that a smaller share is worth more. Raising more than you need, or at the wrong stage, leads to unnecessary dilution.
For your role
- Founders
- Round names and sizes vary a lot by country and year. Match your raise to the evidence you have and to the milestones the money will reach.
- Accelerators & incubators
- Helping founders name their stage honestly, based on evidence, prevents wasted investor meetings.
Primary sources
- A Guide to Seed Fundraising — Y Combinator
- Documents (including the SAFE) — Y Combinator
Common questions
- What are the stages of startup funding?
- Commonly bootstrapping, pre-seed, seed, Series A, Series B and later rounds, with an IPO or acquisition as possible outcomes for successful companies.
- What does IPO stand for?
- IPO stands for initial public offering: the first time a private company sells shares to the public on a stock exchange.
- Do all startups raise venture capital?
- No. Many are bootstrapped or funded by revenue, grants or angels. Venture capital suits companies aiming for very fast, large growth.
Put it into practice
The Fundraising Readiness Assessment shows the gaps to fix before you approach investors.