Fundraising
Raising Your Seed Round: Food and Beverage
Raising for an FMCG startup is notoriously difficult, here's our top tips for a food and beverage seed round
May 15, 2025
Startup Funding Rounds: A Complete Guide
Securing investment is a defining step for startups, but navigating the world of startup funding rounds can feel like a maze. Each stage, from pre-seed to IPO (Initial Public Offering), carries its own goals, investor types, and expectations, but the lines between them aren’t always sharp. Some startups snag a hefty seed round and never raise again, while others might still be validating their idea during a Series A. Risk appetite varies, too. Tech hotspots might see bold bets, while cautious sectors play it safer.
Investor behaviour has evolved with the macro outlook — from the high-valuation frenzy of 2021 to today’s sharper focus on traction and fundamentals. For founders, this shift means more scrutiny but also clearer expectations. The takeaway? The stages offer structure, but flexibility and context shape the journey. To help you navigate this shifting terrain, this guide unpacks each phase, offering founders a practical map through the funding landscape. Whether you’re testing a concept or aiming for a public listing, grasping these rounds helps you sync with the right backers at the right time.
Main Fundraising Stages
Startup funding rounds mark critical milestones in a company’s journey. Here’s a breakdown of each stage, including what it entails, typical amounts raised, and the key players involved.
Pre-seed Funding
Pre-seed funding marks the start of a startup’s journey, often before a startup has a fully formed product. Founders typically tap into their own savings, lean on friends and family, or join accelerators for support. Angel investors might step in too, drawn by early potential. Funding here ranges from £50K to £500K, though amounts vary widely with no strict rules. The focus? Validating the idea, building a minimum viable product (MVP), and assembling a small team to get things moving.
Pre-seed and seed rounds are often structured to qualify for SEIS or EIS tax relief. These tax relief schemes make early-stage equity more attractive to UK investors, yet too few founders know they exist. Cash isn’t the only lever here either. Startups often lean on fractional hires or freelancers to stretch budgets, blending sweat equity with pay to attract talent without draining funds. It’s a scrappy phase, but one where resourcefulness sets the tone.
Seed Funding
Seed funding is the first formal round, aimed at proving product-market fit. Angel investors and venture capital (VC) firms often lead the charge. Expect to raise between £500K and £2M, sometimes more. This cash refines the business model, attracts early customers, and expands the team. It’s about laying a foundation strong enough to convince bigger players to join later.
Series A
Series A steps up the stakes, funding growth for startups with a proven model. Institutional VCs and strategic investors dominate, offering £2M to £15M or beyond. The goal is scaling: boosting user acquisition, expanding the product line, and driving revenue. Startups at this stage need to show they’re more than a promising idea, they’re a business ready to grow.
Series B
Series B fuels expansion for startups with solid traction. Larger VC firms and private equity players typically invest £10M to £50M. This round targets market expansion, hiring senior leaders, and even international growth. Companies here have moved past survival, now they’re building a presence that demands attention.
Series C and Beyond
Series C and later rounds power aggressive scaling or exit preparations. Private equity, hedge funds, and corporate investors jump in, with funding hitting £50M to £200M or more. Use cases include acquisitions, global reach, and gearing up for an IPO. These startups are no longer resourceful early-stage companies, they’re established names chasing dominance.
Ever wondered how many make it this far? A 2025 Carta study of 4,369 U.S. startups founded in 2018 offers clarity: just 4.4% made it to Series C, and only 1.1% progressed to Series D or beyond by January 2025. A Dealroom analysis adds broader context, tracking European startups from 2009-2013 cohorts. It found only 20-30% of seed-funded startups reached Series A, with roughly 50% progressing at each stage thereafter, meaning just 5-9% hit Series C, a figure that’s tightened in recent years due to increased competition and VC caution. Late-stage success isn’t common, but for those who get there, the stakes and rewards are high.
IPO (Initial Public Offering)
The IPO shifts a startup from private to public, opening the doors to public market investors and institutional funds. It’s about raising massive capital and giving early backers liquidity. Few startups hit this milestone, but those that do often redefine their industries. That said, an IPO isn’t the only end goal. Acquisitions by other businesses are a more common exit route for many startups, offering a practical alternative to going public.
How to Navigate Each Stage of Startup Investment
Knowing the stages of startup funding rounds is one thing; preparing for them is another. Here’s how founders can tackle each phase with confidence.
Pre-seed & Seed
Start with a solid business case. Traction, an MVP, and customer validation are your tickets to credibility. Target angel investors and early-stage VCs with a polished pitch deck and business plan. Keep it simple but compelling, demonstrate why your idea warrants belief — and backing. Relationships matter here, so network smartly.
Series A
Growth metrics are your currency now: revenue, user numbers, and retention rates. Institutional investors with a track record in your sector should be your focus. Bolster your team with strategic hires, think VP of Sales or CTO, to signal seriousness. Investors want evidence you can scale, so deliver it.
Series B & C
Scalability takes centre stage. Prove you can expand into new markets and streamline operations. Explore mergers, acquisitions, or corporate partnerships to strengthen your position. Align with investors who bring long-term value, not just cash. They’ll expect detailed plans and execution chops.
IPO & Exit Strategy
Crossing into public markets demands precision. Meet financial and regulatory benchmarks, leaning on investment banks and advisors. Craft a public narrative that stands out. Whether it’s an IPO or acquisition, this stage is about cementing your legacy while rewarding early supporters.
Key Differences Between Seed, Series A, B, and C Funding
Startup funding rounds evolve as companies grow. Understanding their differences, from valuation to investor expectations, helps founders stay ahead.
Valuation Differences
Valuation climbs with each round. Seed funding often pegs startups at £1M to £10M, driven by potential overprofits. Series A valuations say £10M to £50M, hinge on early revenue and traction. By Series B, with £50M to £200M valuations, market share matters. Series C and beyond can hit hundreds of millions, reflecting proven success and scale. Revenue, traction, and market size shape these numbers at every step.
Investor Expectations
Investors’ priorities shift across rounds. Seed backers, often angels, seek vision and grit, accepting high risk. Series A VCs demand growth metrics and a clear path to profit. Series B investors, including bigger funds, want scalability and operational strength. By Series C, private equity and corporates expect polished businesses with exit potential. Due diligence ramps up, too, from light checks in seed to deep dives in later stages.
Use of Funds
Funding priorities pivot with each round. Seed cash builds the product and tests the market. Series A focuses on scaling users and refining offerings. Series B pours money into expansion and leadership hires. Series C and beyond fund big moves: acquisitions, global pushes, or IPO prep. Missteps, like overspending on untested ideas, can derail any stage.
Exit Considerations
Exit options loom larger as the rounds progress. Seed and Series A rarely focus on exits, founders keep control. Series B might spark acquisition talks, diluting equity but boosting scale. Series C often signals IPO or buyout plans, with investors pushing for returns. Each round chips away at founder ownership, so weigh control against growth carefully.
Final Thoughts
Startup funding rounds aren’t just about cash, they’re about building a business step by step. From pre-seed’s scrappy beginnings to the IPO’s grand stage, each phase demands focus and preparation. Founders who grasp the nuances, from investor types to funding use, can steer their startups toward success. The journey’s tough, but with the right approach, every round brings you closer to making your mark.
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