Stages of a Startup

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Holloway Guide ToEquity Compensation
Common questions covered here
What are the typical growth stages of a startup?
What is the difference between companies and corporations?
What is the difference between Seed and Series A, B, and C funded startups?

Stages of a Startup

Understanding the value of stock and equity in a startup requires a grasp of the stages of growth a startup goes through. These stages are largely reflected in how much funding has been raised—how much ownership, in the form of shares, has been sold for capital.

Very roughly, typical stages are:

  • Bootstrapped (little funding or self-funded): Founders are figuring out what to build, or they’re starting to build with their own time and resources.
  • Series Seed (roughly $250K to $2 million in funding): Figuring out the product and market. The low end of this spectrum is now often called pre-seed.
  • Series A ($2 to $15 million): Scaling the product and making the business model work.
  • Series B (tens of millions): Scaling the business.
  • Series C, D, E, et cetera (tens to hundreds of millions): Continued scaling of the business.

Keep in mind that these numbers are more typical for startups located in California. The amount raised at various stages is typically smaller for companies located outside of Silicon Valley, where what would be called a seed round may be called a Series A in, say, Houston, Denver, or Columbus, where there are fewer companies competing for investment from fewer venture firms, and costs associated with growth (including providing livable salaries) are lower.**

caution Most startups don’t get far. According to an analysis of angel investments, by Susa Ventures general partner Leo Polovets, more than half of investments fail; one in 3 are small successes (1X to 5X returns); one in 8 are big successes (5X to 30X); and one in 20 are huge successes (30X+).*


caution Each stage reflects the reduction of risk and increased dilution. For this reason, the amount of equity team members get is higher in the earlier stages (starting with founders) and increasingly lower as a company matures. (See the picture above.)

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