Classification of Startups based on Funding Stages


The Indian startup ecosystem is thriving, driven by innovative entrepreneurs and supported by investors, accelerators, and incubators. From the early groundwork of pre-seed to the high-stakes expansion in Series A and beyond, understanding the objectives at each stage is vital for sustainable growth and success.


Image Source:

Seed Stage:

  • At the pre-seed stage, startups focus on developing a solid business concept, working on partnership agreements, obtaining patents or copyrights, and creating a compelling pitch deck. The emphasis is on laying the groundwork for the business idea.
  • Once the pre-seed stage is completed, the seed stage follows. Here, the startup moves forward with creating a product or prototype based on the established business concept. The objective is to raise initial funds and get the business up and running.
  • Funding Sources in Seed Stage: Self, family and friends, Micro VCs.
  • But unfortunately, only 1 out of 3 startups successfully pass on to the Series A funding stage.
  • At this stage, startups may encounter failure due to financial constraints and an improper product-market fit among other reasons.


Data Source: Why Fewer Than 1 In 3 Seed-funded Indian Startups Get Series A Funding – Forbes India

Proportion of U.S. seed funded companies that raised post-seed funding

Image Source: What Are The Odds Of Success For A US Seed Funded Startup? (


Series A:
This stage involves-

  • Researching industry and markets to identify growth opportunities.
  • Writing a comprehensive business plan to outline strategies for expansion.
  • Launching marketing and advertising efforts to gain customer traction.
  • Generating revenue and aiming for profitability.
  • Planning to scale into new markets.
  • Funding Sources: Accelerators, Super angel investors, Venture capitalists.


Series B:
In Series B, startups focus on-

  • Expanding consumer interest and market presence.
  • Establishing a commercially viable product or service for scalability.
  • Scaling production, marketing, and sales to meet growing demand.
  • Funding Sources: Venture capitalists, Late-stage venture capitalists.


Series C & beyond:
In this stage, the startups concentrate on-

  • Continuously innovating by building new products and exploring new markets.
  • Establishing a strong position in the industry.
  • Attracting investments from venture capitalists and late-stage venture capitalists for substantial growth.
  • Funding Sources: Late-stage venture capitalists, Private equity firms, Hedge funds, and Banks.



  • Making an initial public offering (IPO) to offer shares to the public and provide liquidity to investors becomes a potential exit strategy.
  • An exit through a sale or via VCs or SPACs is another way for investors and founders to realize the value of their investments.



Startups not only create jobs and spur technological advancements but also disrupt traditional industries, fostering competition and pushing boundaries. Startups play a pivotal role in shaping economies, driving prosperity, and shaping the future. From Pre-Seed to Exit, the lifecycle of a startup represents an exciting journey filled with challenges, breakthroughs, and transformative impact.


Read more about Indian Startups: The Fast Track to Funding Your Startup: Convertible Notes, CCD, CCPS, SAFE

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