By Dean O'Meara · Founder, Wrapt
Startup funding terminology can feel like a foreign language. Pre-seed, seed, Series A, bridge rounds, convertible notes. This guide breaks down every stage in order so you know exactly what each one means, how much companies typically raise, and what you need to demonstrate at each level.
Before any external funding, most founders bootstrap. This means using personal savings, credit cards, or revenue from freelancing to fund the initial development. Bootstrapping is not a funding stage in the traditional sense, but it is where most startups begin. The advantage is that you retain 100% ownership and full control. The disadvantage is that growth is limited by your personal resources. Many successful companies stayed bootstrapped forever. Mailchimp reached billions in revenue without ever raising a round. But for capital-intensive businesses or those targeting winner-take-all markets, outside funding becomes necessary at some point.
Pre-seed funding is raised before you have a product or meaningful traction. You might have a prototype, some customer interviews, or a detailed plan. The money typically comes from the founders themselves, friends and family, angel investors, or pre-seed focused funds. Typical amounts range from 10,000 to 500,000 pounds. At this stage, investors are betting on the team and the idea. They expect you to use the money to build a minimum viable product and get initial user feedback. You will likely give up 5 to 15% of your company. The instrument is usually a SAFE note or convertible note rather than priced equity.
Seed rounds are raised once you have a working product and early signs of market demand. Maybe you have a few hundred users, some paying customers, or strong engagement metrics. Seed investors expect to see product-market fit signals, not just a product. Typical amounts range from 500,000 to 3 million pounds. This comes from angel investors, seed-stage venture capital funds, or accelerator programmes like Y Combinator or Techstars. You will likely give up 15 to 25% equity. The money should get you to a Series A, which typically means proving that your growth engine works and is repeatable.
Series A is where you go from having product-market fit to building a scalable business. Investors expect clear evidence that your unit economics work. Your customer acquisition cost should be reasonable relative to lifetime value. You should have a repeatable sales or growth process. Typical amounts range from 3 million to 15 million pounds, led by a venture capital firm that takes a board seat. You will give up 20 to 30% equity. The money is used to hire a real team, invest in marketing channels that have been proven to work, and build the infrastructure to handle significantly more customers.
Series B typically ranges from 15 million to 50 million pounds and funds aggressive growth. By this point you should have strong revenue, a proven business model, and a clear path to profitability or market dominance. Series C and beyond fund international expansion, acquisitions, or preparation for an IPO. The amounts get larger but the equity given up per round tends to decrease because the company is worth more. Not every company needs to raise beyond Series A. Many successful SaaS businesses become profitable after their seed or Series A and never need additional funding. Raising more money is not a success metric. Building a sustainable business is.
Not every startup should raise venture capital. VC money comes with expectations of rapid growth and a large exit. If you are building a profitable lifestyle business or a company that grows steadily without needing a 100x return, bootstrapping or angel investment might be a better fit. The right amount to raise is the minimum you need to reach the next meaningful milestone. Raising too much leads to wasteful spending and unnecessary dilution. Raising too little means you run out before proving enough to raise again. Work backwards from your milestone, estimate costs, add a 30% buffer, and raise that amount.