A startup’s most critical resource is funding, but there are many options out there. Founders can rely on personal savings, credit and debt financing (like small-business loans), or they may trade equity in exchange for capital from angel investors or venture capital funds.
Early funding typically comes from friends and family, angel investors or seed funds willing to take a risk on a new idea. As companies scale and expectations rise, investors want more than proof of concept — they want to see a clear path to profitability and financials that demonstrate your company isn’t just surviving, but poised for success.
Understanding how each stage of startup funding works can help you navigate the process confidently. Explore data-backed definitions and examples to understand what each stage means for a startup, as well as what investors look for at each one.
Pre-seed funding is meant to get a company to its first paying customers or working prototype, or at least enough validation to raise a Series A round of capital. Seed rounds usually require a higher level of commitment from VCs than previous rounds, and will involve some sort of equity sharing.
At the Series A level, startups are ready to publicly open themselves up for additional investments and are likely to have an established valuation. The goal is to grow the company quickly, continue product development and market research, and prepare for an eventual Initial Public Offering (IPO). Companies that reach this stage have strong traction, consistent revenue and are poised for growth.