Startups go through different stages of funding and usually must target a certain milestone for that stage.
Some of the stages are: (Feel free to edit)
What are generally accepted milestones for each of these stages?
Hi Andrey- let me take a stab at this one.
Investors will want you to have a clear idea of what you want to launch and the type of solution that you are bringing to what could be a very big market that would ultimately determine the returns they can generate.
At this stage it could be just you or perhaps have a few cofounders that are brainstorming with you how the future would look like.
: accelerators, incubators, and crowdfunding, and friends & family
Under $100K on a convertible note
With the financing obtained from Seed you are targeting getting a minimum viable product (MVP) to market. Investors would also expect that you build at this stage the critical team that includes the absolute necessary folks to help you execute on the vision. Most companies are here at a pre-revenue stage and the typical way of financing is via convertible notes in order to push back the valuation.
angel investors, accelerators or incubators, crowdfunding, and friends & family
under $2M via convertible notes and equity rounds. Valuations vary but never go north of $4M.
Series A financing rounds have changed significantly over the years. To give you an idea VC firms like Sequoia or Accel are now investing $10M and up for Series A rounds. For this reason, it is a little bit more tricky to accomplish getting to "fundability status" and many startups end up doing a bridge round between Seed and Series A.
During this stage, it is expected that the startup is showing some type of revenue growth month over month. If this is not the case there has to be a critical metric the business is monitoring that is experiencing a good amount of growth.
family offices, VC firms, high networth individuals, and equity crowdfunding
between $5M and $10M. If you have a top tier VC it could be $10M+. Valuations range between $10M to $20M pre-money.
Most of the companies either fail to get to this level or decide to grow on their own. Note that once you bring on a VC they would expect that you do at least a 10X exit which will provide that kind of returns for the level of expectations they have from their LPs (aka investors in their fund).
Series B are used to really scale up a revenues. At this point the company has achieved building a repeatable and scalable business model that has a track record and that is also experiencing momentum and growth month over month from a revenue perspective.
VC firms and some family offices
over $15M at valuations that are around $50M pre-money.
At the Series C level there has been a really good amount of growth experienced by the company. At this point it is common to see over 100 employees as part of the operation. This type of financing will be used towards an international expansion. Given the demand of the product or service new revenue potential opens up on new markets that requires an upfront investment to fuel the operation.
VCs, large institutional investors, and banks
typically you would see amounts been raised around $30M to $50M. Valuations vary but you would see them at over $100M+. Rule of thumb is that you never dilute yourself by over 25% per round of funding.
At this point you are close to an IPO but need a good push to kick things in the high gear to look good towards an S-1 filing. This is the form companies file with critical information before going public.
large institutional investors and banks
normally you would see around $100M of capital being injected into the business. Valuations also vary but here it is normal to start to see unicorn status ($1B+ pre-money valuation).