Seed, Series A, B and C: how startup funding rounds work
When a startup needs money, it usually sells a part of the company to investors. This happens in stages called rounds.
Pre-seed and seed
The earliest money, often from founders, friends, angel investors or small funds. It is used to build the first product and test the idea.
Series A
The company has a working product and early customers. The money is used to grow the team and find a repeatable way to win customers.
Series B
The business is growing and now needs more money to expand into new cities or products.
Series C and later
The company is already large and wants to scale up further, buy other companies or prepare for an IPO. Rounds can continue as Series D, E and so on.
What investors get
Shares in the company. Each round makes the founders' share smaller, which is called dilution. Founders accept this because a smaller part of a larger company can be worth more.
Why the round names are not strict rules
There is no law that fixes the size of a round. A big Series A can be larger than a small Series B. The names mainly show how mature the company is.
For example, EloElo's recent $80 million round was a Series C.
This article is for information and is not investment advice.