Securing funding is a crucial milestone for startups as they transition from an idea to a viable, scalable business. Funding fuels innovation, supports growth, and helps startups reach their goals. But the path to securing investment can feel overwhelming without a clear understanding of how startup funding works.

This guide will walk you through the key stages of funding—bootstrapping, pre-seed, seed, and Series A—explaining what happens at each stage, who the typical investors are, and what you’ll need to succeed. 

By the end, you'll have the knowledge needed to move forward confidently on your startup funding journey. 

1. Bootstrapping (Building the Foundation) 

Bootstrapping is where most startups begin. At this stage, entrepreneurs rely on personal savings, small loans, or revenue generated from early operations to fund the business. 

What Happens During Bootstrapping? 

Founders focus on validating their idea by creating a minimum viable product (MVP) or prototype. They seek direct customer feedback, refine their offering, and start bringing in initial revenue. 

Who Typically Funds This Stage? 

Funding comes from the founder’s own savings, small contributions from friends or family, or even bootstrapped alternatives like credit cards or community crowdfunding campaigns. 

What Startups Need to Prepare 

• A Clear Plan – Develop a lean business plan that outlines your product or service, target market, and revenue potential. 

• Cost Discipline – Learn to operate lean, putting every dollar to good use. 

Key takeaway: Bootstrapping is often necessary to prove your idea before attracting outside investment. 

2. Pre-Seed Stage (Getting Off the Ground) 

The pre-seed stage is typically the first round of external funding a startup seeks. It's all about getting the business off the ground and acquiring resources to start scaling operations. 

What Happens During Pre-Seed? 

Startups use pre-seed funding to finalise their MVP, hire a small team, and conduct further market testing. This stage is often about laying a solid foundation for the product or service. 

Who Typically Funds This Stage? 

• Friends and Family – Support comes from those personally invested in the founder’s success. 

• Angel Investors – These are high-net-worth individuals who take calculated risks by funding early-stage startups. 

• Startup Incubators – Many founders join incubators to secure small investments as well as mentoring and office space. 

What Startups Need to Prepare 

• A Strong Pitch – Highlight your product’s potential and how it meets an unmet market need. 

• Proof of Concept (POC) – Demonstrate early traction such as product usage or customer feedback. 

Key takeaway: The pre-seed stage is about convincing others of your potential and attracting your first external backers. 

3. Seed Stage (Planting the Seeds for Growth) 

The seed stage is where startups secure funding to refine their product and work toward a market fit. This is often the critical phase where businesses position themselves for larger-scale investment. 

What Happens During Seed Stage? 

Funds are used to develop the final product, build the core team, and establish a full go-to-market strategy. Achieving product-market fit is key at this stage. 

Who Typically Funds This Stage? 

• Venture Capital Firms – Smaller VC firms often step in at the seed stage to fund promising startups. 

• Angel Investors – Many angel investors return at the seed stage to make larger contributions. 

• Accelerators – Programs like Y Combinator or Techstars provide funding, mentorship, and exposure. 

What Startups Need to Prepare 

• Traction Metrics – Show promising data points such as customer retention, revenue, or user growth. 

• Business Model – Clearly explain how your startup will generate sustainable revenue. 

• A Detailed Pitch Deck – Your pitch deck should highlight your team, vision, traction, and financial projections. 

Key takeaway: The seed stage prepares startups for scalability and demonstrates their potential to investors. 

4. Series A (Scaling Up) 

The Series A round is focused on scaling operations and achieving significant growth. At this stage, startups aim to prove their long-term viability and build out their market presence. 

What Happens During Series A? 

Startups use Series A funds for scaling operations, expanding into new markets, and optimising revenue models. The focus is on accelerating growth while maintaining efficiency. 

Who Typically Funds This Stage? 

• Venture Capital Firms – Established VCs invest heavily at this stage. 

• Corporate Investors – Companies in related industries may see the startup as a strategic investment. 

What Startups Need to Prepare 

• Impressive Metrics – Showcase in-depth data on revenue growth, customer lifetime value (CLV), and market share. 

• A Scalable Plan – Provide a roadmap for scaling that justifies the investment. 

• Strong Team – Investors at this stage want to know you have the leadership and expertise to take the business to the next level. 

Key takeaway: Series A funding represents a major milestone, signalling that your startup is ready for aggressive growth. 

Wrapping Up Your Funding Journey 

Understanding the stages of startup funding—bootstrapping, pre-seed, seed, and Series A—helps founders chart a clear path for securing the capital needed to build and scale their businesses. Each stage has unique challenges, requiring thoughtful preparation and a focused approach to attract the right investors. 

If you’re ready to take the next step on your funding journey, start building connections with venture capital networks, join industry events, and refine your pitch. These moves can help you position your startup for success.