Funding rounds explained: pre-seed, seed, Series A and beyond

Funding rounds explained: pre-seed, seed, Series A and beyond

Pre-seed, seed, Series A, Series B: the names sound official, but they are loose conventions, and one company's seed round can be larger than another's Series A. What matters is what a round must prove, who puts the money in, and on what terms.

This guide takes each stage in order: what the money pays for, who invests, what they expect and which instruments are used, with sourced 2025–2026 figures for the US and the UK and an illustrative dilution example. If you are unsure where your company sits, read Which funding round is your company ready for? too. If you are raising now, you can publish an anonymous raise on TrustList's Companies raising board, where investors ask for an introduction.

How round names work

Round names describe a sequence, not a size, and data sources define them differently:

• The PitchBook-NVCA Venture Monitor (Q2 2026) tags a round as pre-seed or seed when the investors or the press release call it that; a first institutional round in a company under two years old is tagged pre-seed unless stated otherwise. It groups Series A and B as "early stage" and Series C onwards as "late stage".
• The British Business Bank's Small Business Equity Tracker 2026 uses Beauhurst's company stages (seed, venture and growth), judged on indicators such as product development, commercialisation, sales and profitability rather than on the round's name.

So check which definition a benchmark uses. A UK company classed as "venture stage" might call its own round a seed extension or a Series A.

The stages at a glance

Stage	What the money usually pays for	Who usually invests	Usual instrument
Friends and family	Prototype, set-up, founder time	People who know the founder	Shares, SAFE, convertible or loan
Pre-seed	First product, first users	Angels, accelerators, pre-seed funds	SAFE or note (US); shares or SEIS-ready ASA (UK)
Seed	Product–market fit, repeatable sales	Seed funds, angel syndicates, some multi-stage VCs	Mostly SAFEs or notes; some priced
Series A	Scaling a sales model that works	VC firms, usually one lead	Priced preferred shares
Series B	New segments, markets or products	Existing VCs, new leads, growth funds, corporate venture	Priced round
Series C and later	Scale, acquisitions, exit preparation	Growth equity, late-stage VCs, crossover investors	Priced, sometimes structured
Bridge or extension	Runway to a milestone	Mostly existing investors	Note, SAFE or add-on to last round
Down round	Funding after value has fallen	Existing or new investors, tougher terms	Priced at a lower share price

Friends and family, and pre-seed

Friends and family

This is often the first outside money. It pays for a prototype, legal set-up and some of the founder's time. People invest because they trust the founder, not because they have assessed the business, so be plain with them that they could lose everything they put in.

It is still an investment in securities, and the rules apply:

• US: selling shares needs an exemption from registration. Under Rule 506(b) of Regulation D, a company may sell to any number of accredited investors but to no more than 35 non-accredited investors in any 90-day period, cannot use general solicitation, and must file Form D within 15 days of the first sale.
• UK: under section 21 of the Financial Services and Markets Act 2000, a person must not, in the course of business, communicate an invitation or inducement to invest unless they are authorised or an authorised person approves it; exemptions exist. Take advice before pitching your contacts.

Use the same documents you would use with an angel, so this money does not complicate later rounds. We have found no reliable dataset on typical friends-and-family amounts.

Pre-seed

Pre-seed money gets a company from an idea to a product people use: a first version, early customer conversations, perhaps a first hire. Investors are mainly angels and angel networks, accelerators and specialist pre-seed investors. Accelerators often publish standard terms: Y Combinator's standard deal, for example, is $500,000: $125,000 on a post-money SAFE for 7% and $375,000 on an uncapped MFN SAFE.

Investors at this stage mostly judge the team, the problem and the first signs of demand: a working demo, a waitlist, pilots or letters of intent, and a clear plan for what the money will prove.

Recent figures:

• In Q2 2026, US startups on Carta raised $3.19 billion on more than 11,500 SAFEs and convertible notes. The average instrument, $276,000, was the highest in more than four years of Carta data, and few pre-seed deals exceed $2.5 million (Carta, State of Pre-Seed Q2 2026).
• In 2025, median valuation caps on post-money SAFEs were around $10 million for rounds of $250,000 to $1 million, and $15 million for rounds of $1 million to $2.5 million (Carta, State of Pre-Seed: 2025 in review).
• In the UK, many first rounds use the Seed Enterprise Investment Scheme. A company can raise a maximum of £250,000 through SEIS; when the shares are issued it must have gross assets of no more than £350,000 and fewer than 25 full-time equivalent employees, and a trade no more than three years old (GOV.UK). HMRC statistics cited in the Equity Tracker show SEIS investment rose 14% to £276 million in the 2024–25 tax year.

Seed: proving it works as a business

A seed round pays to find product–market fit and a first repeatable way to win customers, with a small team and enough runway to reach the evidence a Series A investor will want. Investors include seed-stage funds, angel syndicates and multi-stage venture firms that write seed cheques. In the UK, EIS matters here: the Equity Tracker cites HMRC figures of £1.6 billion of EIS investment in 2024–25.

Seed investors want usage and retention, early revenue or paid pilots, an honest view of the market, and a plan tying the money to milestones. A clear pitch deck and an organised data room shorten the process.

Recent figures:

• US: in Carta's benchmark of more than 1,000 software rounds raised in the six months to its 10 July 2026 update (bridges and extensions excluded), the median seed round raised $4.1 million at a median valuation of $24.3 million, with 18% of the company sold (Carta).
• The PitchBook-NVCA Venture Monitor (Q2 2026) reports that median pre-money valuations at pre-seed and seed have more than doubled compared with 2021, and that median deal value rose in 2026 at every series except seed. It says 2026 is on pace for a record of more than 10,000 US companies raising a first venture round.
• UK: the Equity Tracker reports a median seed-stage deal of £0.6 million in 2025 and a median seed-stage pre-money valuation of £3.2 million, both the highest on record. Seed-stage deal numbers fell 27%, and the median time between rounds for seed-stage companies lengthened to 14.4 months, from 12.4 months in 2024.

Series A and Series B: from proof to scale

Series A

Series A is usually the first priced round. A lead investor agrees a price per share, the company issues a new class of preferred shares, and earlier SAFEs and notes convert. The money pays to scale a sales and marketing model that already works, hire a leadership team and widen the product. Investors are mostly venture capital firms, and the lead often takes a board seat.

A Series A investor wants evidence that growth is repeatable: revenue growth, retention, sound unit economics and a market large enough for a venture-scale outcome.

The paperwork becomes standardised. In the US, the NVCA model legal documents cover the certificate of incorporation, stock purchase, investors' rights, voting, and right of first refusal and co-sale agreements. In the UK, UK Private Capital (formerly the BVCA) publishes model articles, shareholders' and subscription agreements and a summary of terms, drafted for a Series A and stated not to suit a seed round.

Carta's July 2026 benchmark puts the median Series A at $14.4 million raised at an $80 million valuation, with 18% sold. Medians hide wide gaps: in Q1 2026 Carta put the median Series A valuation for AI foundation-model startups at about $300 million, against $55 million for non-AI startups (Carta, Q1 2026). PitchBook-NVCA puts the median Series A pre-money valuation 89.9% above 2021. See also Series A funding programmes.

Series B

Series B pays to expand what works: new customer segments, countries or products, and the management to run a bigger organisation. Existing investors often follow on beside a new lead from a larger VC fund, a growth fund or a corporate venture arm. They expect a proven model, predictable revenue and a team beyond the founders.

Carta's July 2026 benchmark shows a median Series B of $25 million at a $191 million valuation, with 12% sold. In Q1 2026, Series B primary pre-money valuations on Carta were up 17.2% on Q1 2025, and during 2025 median Series B dilution fell from about 15% to 12.9% (Carta, 2025 in review).

Series C and later growth rounds

From Series C, rounds fund scale: expansion, acquisitions, heavy capital spending and preparation for a sale or listing. Investors widen to growth equity firms, late-stage VCs, corporates and "crossover" investors, which PitchBook defines as asset managers, hedge funds, mutual funds and sovereign wealth funds likely to invest just before an exit. They expect substantial revenue, a credible path to profitability and a realistic exit route.

• Carta's July 2026 benchmark: a median Series C of nearly $40 million at a $391 million post-money valuation, with less than 10% sold; a median Series D of $63 million at $789 million, with 8% sold.
• In the UK, the Equity Tracker's growth stage had a median deal of £2.6 million and a median pre-money valuation of £22.3 million in 2025, but an average deal of £14.3 million, a sign of how concentrated large rounds are.
• In the US, rounds of $100 million or more took 87.5% of the $412.7 billion invested in H1 2026 (PitchBook-NVCA). Read headline valuations with care: the post-money figure reflects the top price in the round, not what every investor paid, and large rounds are often tranched or fold in earlier commitments.

Bridge, extension and down rounds

Bridge and extension rounds

A bridge (or extension) round usually sets no new valuation: according to Carta, the company typically issues convertible notes, or existing investors add capital to the previous round, to reach the next priced round. In Q2 2025, 16.6% of all cash raised on Carta came through bridge rounds, up from 11.8% a year earlier; at Series A the share was 22.5%. The median gap between primary (priced) rounds across all stages was 696 days, about 23 months. PitchBook-NVCA's Q2 2026 report says the time between rounds has since compressed, especially for AI companies.

A bridge works best when it buys time to reach a specific, visible milestone; one that only postpones a hard conversation rarely helps.

Down rounds

Carta defines a down round as one where the pre-money valuation is lower than the post-money valuation of the previous round. A flat round repeats the previous price. The costs go beyond the headline number:

• earlier preferred investors may have anti-dilution protection that gives them more shares, pushing dilution onto founders and employees;
• employees' options can end up "underwater", with exercise prices above the new share price;
• new investors may demand tougher terms, such as higher liquidation preferences, participation rights or pay-to-play clauses.

Down rounds have become rarer: Carta's down-round rate fell to 11.4% in Q1 2026, from a peak of 22% in 2023. But PitchBook-NVCA warns that companies which raised at high prices on compressed timelines must grow fast to raise again or risk a down round, and that undisclosed terms often coincide with structured, down or flat rounds.

How instruments change from stage to stage

SAFEs and convertible notes

Early rounds usually avoid setting a price. Y Combinator describes a SAFE as a short contract in which an investor funds the company now for the right to shares later. YC standardised on the post-money SAFE in 2018; the ownership sold equals the investment divided by the valuation cap. Its forms offer a cap, a discount or an uncapped "most favoured nation" (MFN) version, plus an optional pro rata side letter. A convertible note does a similar job but is a loan, so it normally carries interest and a maturity date. Carta reports that the post-money SAFE with a cap and no discount remains the standard pre-seed instrument, that notes tend to have lower caps than SAFEs, and that most early-stage rounds under $4 million in 2025 used SAFEs or notes.

The UK difference: advance subscription agreements

UK angels often want SEIS or EIS income tax relief, and HMRC's rules shape the instrument. Its guidance on SEIS advance subscription agreements (last updated 30 July 2026) says the payment must not in effect be a loan, an ASA used to convert a debt is not eligible, and a qualifying ASA cannot allow a refund under any circumstances, bear interest or offer investor protection. HMRC expects a longstop date no more than six months after signing. A convertible loan note fails these tests, and a standard US SAFE is unlikely to meet them, so if your investors want relief, issue shares directly or use an ASA written to HMRC's conditions.

For later rounds, the Enterprise Investment Scheme guidance, updated on 6 April 2026 with higher amounts, says most companies can raise up to £10 million in any 12 months and £24 million in their lifetime from EIS, SEIS, VCTs and similar sources, generally within seven years of their first commercial sale. Knowledge-intensive companies can raise more.

Priced rounds

From Series A, and sometimes at seed, investors buy preferred shares at an agreed price per share. Their rights typically include a liquidation preference, anti-dilution protection and information rights, and often a board seat and pro rata rights. The model documents above show what "standard" looks like before you read a term sheet.

Dilution across rounds: an illustrative example

Illustration only. The company, amounts and valuations are invented to show the arithmetic; the share sold in each round is chosen to sit close to Carta's 2026 medians.

Two founders own 100% of a company. It then raises:

1. Pre-seed: $500,000 on a post-money SAFE with a $5 million cap: $500,000 ÷ $5 million = 10%, measured just before the SAFE converts.
2. Seed: $3 million at a $15 million post-money valuation (20% sold). The SAFE converts at the same time.
3. Series A, B and C: $12 million at $60 million, $25 million at $200 million and $40 million at $400 million, all post-money (20%, 12.5% and 10% sold).

After round	Founders	Pre-seed	Seed	Series A	Series B	Series C
Pre-seed (SAFE counted as if converted)	90%	10%	–	–	–	–
Seed	72%	8%	20%	–	–	–
Series A	57.6%	6.4%	16%	20%	–	–
Series B	50.4%	5.6%	14%	17.5%	12.5%	–
Series C	45.4%	5.0%	12.6%	15.8%	11.3%	10%

Figures rounded to one decimal place.

Each round multiplies every existing stake by one minus the share sold: after the seed, the founders' 90% becomes 90% × 0.8 = 72%. Three things change the real picture:

• Option pool. Investors often ask for an employee option pool to be created or topped up before a priced round, out of existing holders' stakes. A pool of 10% created that way at the seed would leave the founders with about 63% after the seed and about 40% after the Series C.
• Pro rata rights. Investors who buy into later rounds to keep their percentage hold more than the table shows.
• Stacked SAFEs. Several SAFEs at different caps all convert at once. Model every instrument in your cap table software before signing.

A smaller percentage is not failure in itself: here, 45.4% of a company valued at $400 million is worth about $180 million on paper. Only on paper, though: liquidation preferences usually pay investors back first in a sale.

Other markets

The same round names are used worldwide, but sizes and investor types vary. The Equity Tracker estimates the UK had a 32% venture capital investment gap with the US over 2023–2025, adjusted for the size of the economy. For local schemes, investors and instruments, see our guides to startup funding in the UK, the US, India, Pakistan, the UAE and Saudi Arabia.

Where to go next

• Which funding round is your company ready for?
• Ways to fund a company: equity, debt, grants and crowdfunding
• How to raise money for a startup, step by step
• Should you raise money at all?
• Ready? Publish your raise on Companies raising.

About this guide. General information only, not financial, legal or tax advice. TrustList does not arrange or advise on investments. Figures come from the sources linked and were checked on 26 September 2026; market data changes every quarter.