DIFFERENT ROUNDS OF FUNDING AND THEIR DIFFERENCES
This is an art not a science and the landscape is changing rapidly so there are plenty of exceptions. These are Bay Area numbers. Valuations and investments will be lower and smaller other places.
- •Seed Round or Angel roundUsually between $200,000 and 2MM but can be bigger or smaller. Often structured as convertible debt with a cap and a discount, or using the new SAFE (YC) or 500 Startups docs & terms. Will usually be friends and other people in your network, or if you are less established but have an impressive demo or just come of well in person and have the right resume, you might be able to get connected to other angels who'll invest. Often 5-10 people involved, all individuals or seed funds.
- •Series ACheck size $2MM-$25MM usually. Usually from one VC firm sometimes with another firm participating at a smaller amount. Occasionally with a few strategic angels brought in. Lead VC will almost always take a board seat here. VC wants to own about 1/3 of the company to have it be worth firm's time. Company doesn't necessarily need revenue but needs to show some kind of traction, product market fit, etc. Resumes of the team very important here.
- •Series BCheck size $10MM-$150MM. Typically, company is on clear path to being quite profitable but still has a lot of upside. Common for 2 or even 3 firms to participate. Lead VC will usually take a board seat but not always. To raise a B, business really needs to stand on its own. Your ideas and your past success, resume, etc. don't stand on their own anymore. In pre series B rounds, it's really the founders raising money personally. In B and beyond its the strength of the company raising typically.
- •Series C and BeyondDone by big VCs. Checks can be huge -- hundreds of millions. Tiding over an already successful business til it's IPO or to fund capital intensive expansion initiatives or acquisitions. Innovation happening here (see Uber's last round). Often no firm can write one check to fill the round so various entities get involved.