Step 2: Find out your startup's funding round

Please note, that in addition to the main funding rounds, investors can allocate intermediate (e.g., Pre-Series A) or mixed (e.g., Series A/B) rounds.  

Also, the indicated below company valuation and amounts invested at every funding round are rather approximate and depend on the scale of the project, market situation, investor’s conditions, and so on. For example, it is well known that the US investors involved in the Series A-C+ rounds provide 2-2,5 times more money than European or Asian ones.

 

 

Pre-Seed Round

Characteristics:

  • Typical company valuation: $1M-$3M

  • Average amount invested: < $1M

  • Average equity stake: 10-15%.

Suitable Investor Type: Angels, Early-Stage VCs, Accelerators, Friends & Family, Crowdfunding. 

 

As little or no track record is available in the pre-seed funding round, investors evaluate the founding team and the strength of the idea.

 

The raised funds typically spent on MVP development and hiring critical team members.

 

Seed Round

 

 

Characteristics:

  • Typical company valuation: $3M-$6M

  • Average amount invested: < $1,5M

  • Average equity stake: 10-25%.

Suitable Investor Type: Angels, Early-Stage VCs, Accelerators, crowdfunding.

Investors focus on the company's ability to solve customers’ needs, in other words, the ability to achieve product-market fit. At this stage, investors expect some level of traction or consumer adoption, such as revenue or user growth.

 

The raised funds typically spent on product development, market testing, and operations scaling-up.

 

 

Series A Round

Characteristics:

  • Typical company valuation: $10M-$15M

  • Average amount invested: < $10M

  • Average equity stake: 15-50%.

Suitable Investor Type: Super Angels, VCs.

Investors expect companies that have a strategy for creating long-term profit.

The raised funds typically spent on:

  • Figuring out or scaling of the distribution model and marketing processes

  • Scaling geographically or across verticals

  • Business model definition and adjustment.

 

 

Series B Round

Characteristics:

  • Typical company valuation: $30M-$60M

  • Average amount invested: < $25M

  • Average equity stake: 15-30%.

Suitable Investor Type: VCs, Late-Stage VCs, Family Offices.

 

Investors expect companies to generate consistently growing revenue. Signs of growth in revenue, users, and product or service success.

 

The raised funds are typically spent on: 

  • Business model scaling up

  • Highly-paid staff recruitment 

  • New revenue streams adoption

  • Expanding into different market segments

  • Making acquisitions.

 

 

Series C+ Round

Characteristics:

  • Typical company valuation: $100M-$120M

  • Average amount invested: < $50M

  • Average equity stake: 15-30%.

Suitable Investor Type: Late-Stage VCs,  Family Offices, Private Equity Firms, Banks, Hedge Funds.

 

Investors expect companies with high financial performance developing new products, expanding to new markets, buying out other businesses, or preparing for an Initial Public Offering (IPO).

 

The raised funds are typically spent on: 

  • Fast growth

  • New markets penetration, including international markets

  • Acquisitions of related businesses.

 

 

Private Equity Round

Characteristics:

  • Average amount invested: > $50M

  • Average equity stake: Majority control, up to 100%.

Suitable Investor Type: Private Equity Firms, Hedge Funds.

 

It is a late-stage round and investors are looking for more firmly established companies generating significant cash flow with close exit opportunities (IPO or M&A). The investment is made to help such companies grow and provide some liquidity for early investors and employees – so they can stay private longer.

 

The raised funds can be spent on: 

  • Restructuring

  • Cost-cutting measures

  • Growing sales

  • Acquiring a related business.