Back

What stage is my start-up?

As farmers plant seeds in their fields and with proper care they grow the crops for sale, so do founders plant their ideas and later reap the rewards in the form of a successful start-up. This process has several stages known in the start-up world as idea, pre-seed, seed, A series, B series and then probably IPO.

Why is it important to know the stage?

Investors, potential employees, partners, and others can see what you're currently doing and what opportunities and challenges are waiting for you. You can define what roles should be filled in a company, as well as what your funding potential is in the future.

💡 IDEA STAGE: it all starts here

If we really want to mention all the stages, we cannot leave out the “idea stage”. Identifying a problem that the founder wants to solve with the product is the first step in the birth of an idea. Recommended next step is to find the first advisors or mentors to help you define the idea and challenges or get some useful positive/negative feedback. Founders in this stage often join incubators, accelerators, or local entrepreneurship programs to get such a support.

What steps to take in this stage:

  • Before focusing on the product development, it is necessary to identify target customers, market, and competition. You do not want to make a product which nobody buys after all.  
  • Research in detail the problem and all possible pain points in the industry your solution can solve. Answer the question: Is the problem big and significant enough that customers will pay to figure it out?
  • Think about the business model – how to make money from your idea.
  • Start to work on the Proof of Concept (PoC). PoC is the process of finding if the idea is practical and survive in the real world with a theoretical demonstration. Research what technologies and tools you will need for the development and think about whether you need additional co-founder or an expert in your team.

Funding:

It is quite difficult to find an investor or VC fund willing to support the start-up in this very early stage. Founder often bootstraps or use funding from FFF – family, friends, and fools. But there is still a chance to impress an angel investor or investing incubators and accelerators, who are more open to provide smaller amount of money for longer period with bigger patience.

Our advice:

Remember, securing funding at the idea stage is often about selling your vision and your team's capability to execute it. It requires a combination of a compelling story, evidence of market demand, and your ability to convey confidence in your startup's potential.

🌱 PRE-SEED: going from theoretical to practical

This phase is often a preparation time for the funding. The better you do your homework, the better you can raise money. It is a time for planning and validating the idea.

What steps to take in this stage:

  • You continue building on your PoC and develop the first prototype, then a first production version - MVP (minimum viable product).
  • Validation is crucial, not just for the founders, but for potential partners and investors. Talk to your potential customers, show, and talk about the prototype and MVP, find the early adopters brave enough to try it, make assumptions, test them, and find out the risks.
  • During the process of MVP/product development founders should always count in all the result of validation process and adapt, improve, remove, iterate. All the time.
  • Validation results can also show the founders that the start-up solution is not viable, then there is time to decide if to rather pivot or leave it.
  • Protect your intellectual property – can you get any patents, trademarks, etc.?
  • If you didn´t analyze thoroughly the market, competition, or target customers during the idea stage, this is the latest time to do so. It is crucial for the next development of the product and a decision itself if to continue this entrepreneurship journey or not.
  • Create a sale strategy.
  • Create a pitch deck.
  • Create your brand, start the social media accounts for the company.
  • Incorporate your company. We highly recommend limited liability company.

Funding:

Pre-seed is still early stage for most of the investors because product is not on the market nor validated by the real customers. Bootstrapping, FFF, accelerators and angel investors are still the most common option to finance your start-up, but it is possible to find VCs willing to invest into pre-seed companies or try the crowdfunding.

Our advice:

At the pre-seed stage, investors are looking for validation of your business concept, evidence of market demand, and a capable team. Emphasize your startup's progress, show a clear path to market success, and position your company as an attractive investment opportunity.

💪 SEED: it´s getting serious

Start-ups in seed stage are dynamic and often looking for their first funding to get a chance to fight on the market and reach for the potential success. Raised money are used on product development, customer acquisition, additional market research, marketing, hiring new employees or for other operational costs.

What steps to take in this stage:

  • This is a good time to look for missing talent in your team: employees or additional co-founders.
  • The focus is now on the product and it launch, its functionalities, refining it by using the rules of UX and UI to make it simple and usable for all customers.
  • Watch the numbers and trends in your company - sales dynamics and business metrics.
  • Expand your customer base. Do not be afraid to test the different communication and advertising channels and target customers to get the word out to the wider audience.
  • Update your pitch deck.

Funding:

It is time to look for the funding from VCs. The average ticket in seed rounds is between $1-5M.

Our advice:

During the seed stage, investors are looking for startups with a proven concept, clear growth trajectory, and the potential for scalability. Your ability to execute on your business plan, effectively deploy seed funding, and position your startup for future rounds of financing will be crucial.

🚀 SERIES A: grow, expand and conquer…fast

The prerequisite in this stage is to have a great product on the market and a plan with a suitable skill set to scale. Start-up is moving towards product-market fit. Start-up coach and investor Marc Andreessen said a famous quote about product-market fit “It means being in a good market with a product that can satisfy that market,”.

What steps to take in this stage:

  • A great deal of attention is paid to sales, marketing and scaling up.
  • Keep building your team to support growth and expansion of the company.
  • Be flexible, quick, and willing to change when something doesn't work.
  • As founders lead the company and facilitate rapid and effective growth, they delegate smaller tasks to colleagues.
  • Be mindful of the flow of money in the start-up, particularly the runway (how many months can the company run without going out of money). Additionally, keep in touch with VC funds to get more funding at the right time without running the risk of bankruptcy.
  • Determine how to make the growth sustainable and generate long-term profit with the start-up´s business model.

Funding:

Series A is a perfect stage to get a big attention of VCs. The average ticket is between $5 -20M. The amount of funding money depends on the industry.

💰 SERIES B, C, D+: best players playing with big money

Here it is all about acceleration growth, scaling, and international expansion. The sales strategy and sale teams should be working well, the skillset of the employees is balanced to cover the company´s needs. The start-up established its presence within the industry, product-market fit exists. But the company is constantly in a need of a fuel – fundraising and hiring more talent.

What steps to take in this stage:

  • Think about the “end game”. Do you want to keep leading the company in many years ahead? Is it IPO? When?

Funding:

In these series are rolling big amounts of money. The funding starts somewhere at $10M and goes up to hundred millions of dollars.

January 10, 2024

Welcome to the newsletter for (future) unicorns

Subscribe to our monthly LinkedIn newsletter UNICORN CHRONICLES and enjoy tips and fresh news from start-up world.
Subscribe