Seed, Series A, B, and C: what each round is actually for
What each stage of financing is meant to buy, the evidence investors expect at each one, and what happens when a company raises out of order.
9 min readUpdated
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Raising money is the part of company building with the least public information and the most folklore. Founders learn the mechanics once, usually during their first round, and usually from the person sitting on the other side of the table. These guides cover the same ground before you need it: how a priced round is actually assembled, what investors are really evaluating when they say they are evaluating the team, what the standard clauses in a term sheet commit you to years later, and how the two ways out — an IPO or an acquisition — are negotiated and executed.
The through-line is that every financing is a trade between money now and control later. A round that looks generous on valuation can be expensive on governance, and a round that looks expensive on dilution can be cheap if it buys the eighteen months that prove the business. Reading the terms as a package rather than as a headline number is the single habit that separates founders who keep optionality from founders who discover, at the exit, that they had none.
What each stage of financing is meant to buy, the evidence investors expect at each one, and what happens when a company raises out of order.
The fund maths behind every investment decision, and why a good business can be a rational pass.
Liquidation preference, anti-dilution, pro rata, board composition and the clauses that quietly decide who gets paid.
How uncapped, capped and post-money instruments convert, and why stacked SAFEs surprise founders at the priced round.
What actually happens when a company raises at a lower valuation, how anti-dilution bites, and when a recap is the only option left.
Bankers, the S-1, the roadshow, pricing night and the first-day pop — what each stage involves and what the whole thing costs.
Strategic versus financial buyers, how a price gets set, and why the headline number is rarely what the founders receive.