In recent times there has been a lot of activity in the private markets juiced by cheap capital and the pandemic, this has pushed average financing rounds – at least at Series A and beyond – to new heights. 

So much so that it has become somewhat meaningless to talk about venture rounds in terms of average cheque size or valuation, so we’re going to take a shot at giving you some idea of where you should be at when you’re looking to raise that next round.

But first, because we’re nothing if not scrupulous (what else would you expect from a bunch of startup CFOs?!) so here’s some data on global deal sizes courtesy of this report by KPMG.

As you can see there has been a massive jump from 2020 to 2021 in median deal size with angel – or Pre-Seed – rounds at $0.7mn, Seed at $2mn, Series A at $10m, Series B at $23mn, Series C at $52m and Series D and beyond at $100m.

Given that median deal sizes were so much significantly lower in prior years, you can see why defining a fundraising stage by dollars invested is not a particularly valuable metric, so here’s our guide to funding rounds and what you should be looking out for.

Pre-Seed

Your Pre-Seed round comes before your Seed – simple right? OK, kidding aside, the Pre-Seed round is typically the first round you’ll raise from external investors who aren’t made up of your friends and family. You’ll be just getting your venture off the ground, maybe you’ll have done some surveys and have found someone to help you build get your first build-out of the door. Your venture will typically look something like this:

Team: Early founding team only

Tech: Pre product

Traction: Pretotyping or early validation

Seed

When ventures hit their Seed round, and whilst it is normally still funded by angels it is sometimes the first time they take on some institutional capital or maybe joined an accelerator. It’s the most exciting of rounds for founders because it’s the point at which they have seen some positive momentum in their business. Maybe you’ve built out your minimum viable product, or even taken it to beta, in some instances you may have already made first revenue.

At this point, your venture has moved to look like this:

Team: Founding team plus first hires – normally in product, tech, or marketing

Tech: Post prototype probably with an MVP in place

Traction: Early revenue, user growth, and signs of product/market fit

Series A

By the time you’ve gotten to raising your Series A, the expectation is that you’re showing some serious signs of growth potential, a growing team, more advanced signs of product/market fit, and efficient unit economics. By this stage, your venture has probably brought on some specialists in key commercial or technical roles and as a founder, you’re trying to shepherd your business from unconstrained, even chaotic, growth to more process-driven scaling. This is often the first round of venture capital you’ll take on.

By now your venture looks a little like this:

Team: Growing fast, typically doubling every 12 months or less

Tech: Product is refined, focus on new features and maintenance

Traction: Growing revenue (for venture minimum 2x year on year), entering new markets

Series B

The business is now substantially de-risked and the name of the game at this stage is to go big or go home. You may be entering new geographic markets and hiring in multiple countries, you’re likely looking at M&A (mergers and acquisitions) opportunities and need to keep a war chest not only to look at businesses to acquire but almost as important to pour fuel on your marketing to scale further, faster, At this point, you are pretty far from that scrappy startup raising your first round, you’ve got a substantial board of directors, senior C-Suite executives, and a large team. This may even be your first opportunity to take some cash off the table to de-risk yourself just as you have de-risked your venture.

Here’s what your venture looks like now:

Team: Continuing to grow apace, shift from technical to commercial hires

Tech: Building (or acquiring) complimentary products

Traction: Scaling rapidly, starting to approach the $100m revenue mark

Series C+

At Series C and beyond the likelihood is that your business is already cash-flow positive or could get there pretty easily if it tried so any capital raised at this point is about further growth, as quickly as possible, this might be acquiring smaller competitors, launching entirely new products, attacking massive new geographical markets or giving liquidity to early shareholders or employees. And just as the use of funds has changed, so might the nature of the investors. The business is now sufficiently de-risked to attract not just later-stage venture capital funds, but also earlier-stage private equity funds, hedge funds, and even banks. By this stage, you may have brought venture debt or more traditional loans into the mix. From here on in, typically any additional rounds you raise are predominantly a way of postponing hitting the public markets and all that that entails.

By now your venture looks like this:

Team: Early team has rotated out, founders may have moved permanently to the board

Tech: Fully-fledged product, upgraded to more efficient stack

Traction: Well established in the market, growth likely to have slowed down by this point

So there we have it, what ventures look like from Pre-Seed all the way to Series C and beyond. Where do you fit in on your fundraising journey?