Startup founders typically seek external funding to support their growth and operations as a new business. This is where the funding series comes into play. The funding series refers to the various stages of investment that startups go through to raise capital from investors. Each series represents a different phase in a company’s development, reflecting its evolving goals, market position, and financial needs. Every round of funding plays a significant role, from validating a business model to scaling operations or entering new markets.In this article, we will explore the different stages of a funding series and how they work. Understanding the structure, purpose, and expectations of each funding series is essential for entrepreneurs seeking capital or investors looking to make informed decisions.

What is a Funding Series?

Funding series are the structured rounds of investment that startups go through to raise capital from investors in exchange for equity or ownership in the company. These funding rounds typically follow an initial seed funding phase and are labelled Series A, B, C, and more. As investors provide capital in exchange for equity, they expect returns if the company succeeds.Each round in the funding series represents a specific stage in the startup’s growth and development. For example, seed funding is often used to launch a company and develop its initial product, while Series A funding helps the company to scale operations and expand market reach. Further rounds, like Series B and beyond, are aimed at further growth, entering new markets, or preparing for an IPO or acquisition. The funding series seeks to provide startups with the capital needed to achieve specific growth milestones at different stages of their development.

How Do Funding Series Work?

Each series in the funding process is designed to support a specific stage of the company’s development. It typically begins after the initial seed funding, which helps turn an idea into a viable business model and prototype. Subsequent stages, like Series A, B, and beyond, allow startups to secure larger investments from investors. Each stage in the funding series also involves a new business valuation, which determines the startup's monetary worth. With each round, the company’s valuation typically increases, allowing it to raise more capital with less dilution of ownership for the founders and early investors. However, raising funds through these funding series also means founders give up increasing equity stakes as the company grows. Not all startups go through every round, with many stopping once their funding needs are met or the business stabilizes. 

How Many Funding Series are There?

There is no fixed number of funding series before an IPO, but typically, startups will go through five or more funding series. It starts with pre-seed and seed funding, followed by Series A, B, and C. Beyond Series C, there can be additional stages such as Series D, E, and more, which are less common but do exist for companies continuing to raise capital for business growth or strategic purposes. 

Pre-Seed Funding

Pre-seed funding is the earliest and often informal round of funding. It typically involves founders, family, friends, or incubators to provide initial capital to launch the business. The funds are used to develop prototypes and minimum viable products, conduct market research, and build the initial team. The funding ranges from a few thousand dollars to $1 million and can span 6 to 18 months. This round is mostly about proving the concept and preparing for formal fundraising. 

Seed Funding

Seed funding is the first official round of external investment from professional investors. They can include seed-stage venture capital firms, angel investors, etc. It helps startups refine their product, identify their target market, and build a scalable business model. This stage is critical for early product development and market entry. Amounts vary widely, but it is often hundreds of thousands to a few million dollars. The seed funding process typically spans 12 to 24 months.

Series A

Series A can be considered the first significant round after seed funding. In this stage, startups usually develop a working product with some early user base or revenue. The goal is to refine the business model, scale customer acquisition, and optimize operations. Funding amounts range from $2 million to $15 million. This stage usually lasts 12–18 months.

Series B

Series B funding supports startups that have proven their product-market fit and are ready to scale aggressively. The goal is to expand market reach, grow the team, and increase production or service capacity. Investments in this stage are larger, often between $7 million and $50 million, and come primarily from venture capital firms. A Series B round lasts 10–18 months before moving to Series C.

Series C

Series C is a late-stage round for mature companies looking to expand, enter new markets, make acquisitions, or develop new products. This round attracts larger institutional investors such as private equity firms and investment banks. Funding amounts are substantial, often $50 million or more. Series C and beyond mostly are less standardized in duration but usually occur as companies show predictable growth and prepare for exit strategies like IPOs or acquisitions.

Phintraco Natha Kapital: Powering Innovation Through Investment and Expertise

Phintraco Natha Kapital is a dedicated partner for startups seeking growth capital and strategic guidance. Established in 2020 as a reputable private equity firm backed by Phintraco Group,  we offer strategic investment management and tailored advisory services for companies looking for growth. While we support companies at all stages, we particularly seek to partner with established businesses that need leverage to accelerate growth.Our investment focus spans diverse sectors, including ICT (encompassing IT infrastructure, contact centre solutions, and emerging technologies), property, manufacturing, and education. We also offer tailored advisory services, leveraging our extensive network and deep industry expertise to unlock potential.Phintraco Natha Kapital invests in companies and the founders driving them.  We believe in fostering long-term success through personalized support, strategic guidance, and access to resources beyond capital. Editor: Trie Ayu Feminin & Irnadia Fardila