Raising funds for your startup can feel like running a marathon – with sprints in between. Each investment round has its own challenges, timelines, and expectations, and preparing for them requires more than just good timing. You need to know when to act, what investors will expect, and how to position your startup to meet those expectations.
Let’s walk through the funding timeline, from seed to Series A and beyond, so you’re ready to make the most of every round.
Seed Funding: The Starting Line
When to Raise:
Seed funding is all about getting your startup off the ground. Founders typically pursue this round once they have a solid idea, a prototype or MVP (minimum viable product), and some evidence of demand or traction. For most startups, this happens within the first 12-24 months of starting out.
What Investors Look For:
Seed investors – usually angel investors, early-stage VCs, or even friends and family – want to see:
- A clear and compelling problem your product solves.
- Early traction, like initial users, signups, or revenue.
- A strong founding team with the passion and skills to execute.
- A vision for the future, even if it’s not fully fleshed out yet.
How to Prepare:
- Build a Solid Pitch Deck: Keep it concise but impactful. Focus on your problem, solution, market opportunity, and team.
- Get Your Financials in Order: While detailed forecasts aren’t expected, you should have a clear understanding of your costs and runway.
- Leverage Your Network: Seed investors are often people within your immediate or extended network, so don’t hesitate to ask for introductions.
Series A: The Growth Plan
When to Raise:
Series A is all about scaling. This round typically happens 12-18 months after your seed funding, once you’ve proven your product-market fit and are ready to grow. You’ll need this funding to hire key talent, expand into new markets, or ramp up marketing and sales efforts.
What Investors Look For:
Series A investors expect:
- A proven business model with consistent revenue or a growing user base.
- Clear metrics, such as CAC (Customer Acquisition Cost), LTV (Lifetime Value), and monthly recurring revenue (MRR).
- A plan for scaling operations and reaching new milestones.
- Evidence that your startup can compete and win in your chosen market.
How to Prepare:
- Polish Your Metrics: Ensure your key performance indicators (KPIs) are strong and well-documented.
- Develop a Detailed Business Plan: Investors will want to see exactly how you plan to use their money to grow.
- Strengthen Your Team: Having the right talent in place, particularly in leadership roles, can make a big difference.
Series B and Beyond: Scaling to Dominate
When to Raise:
Series B (and later rounds) are all about scaling big. This is the stage where you’re looking to dominate your market, develop new products, or even expand internationally. These rounds often happen 18-24 months after Series A, once your growth trajectory is clear.
What Investors Look For:
At this stage, investors will focus heavily on:
- Sustained growth and strong market traction.
- Clear competitive advantages and barriers to entry.
- A scalable business model that can deliver high returns.
- A strong leadership team with a track record of execution.
How to Prepare:
- Perfect Your Financial Models: Investors expect sophisticated forecasts that demonstrate profitability potential.
- Highlight Your Growth Story: Show how you’ve used previous funding to achieve milestones and drive value.
- Be Ready for Due Diligence: Investors will dig deeper into your financials, operations, and legal structures. Make sure everything is clean and organised.
General Tips for Every Stage
- Start Preparing Early: Fundraising takes time. It’s best to start conversations with investors at least six months before you need the funds.
- Build Relationships: Investors are more likely to back founders they know and trust. Stay in touch with potential investors, even when you’re not actively raising.
- Know Your Numbers: Be ready to answer questions about your financials, market, and growth plan at any time.
- Stay Flexible: Each round is different, and so are investors. Be ready to adapt your approach based on feedback and changing market conditions.
Ready for Your Next Round?
Raising funds is never easy, but with the right preparation and a clear understanding of what each stage requires, you can approach investors with confidence. Whether you’re gearing up for your seed round or planning your Series B, remember that every “no” is one step closer to a “yes.”
Need help getting investor-ready? At Standard Ledger, we’ve worked with countless founders to refine their financials, build strong forecasts, and nail their pitches. Let’s chat about how we can support your next funding round.