The 2025 Fundraising Guide - Backed by Research, Facts & Figures
Synthesizing Insights From the Data
šĀ Hi, Iām Andre and welcome to my newsletter Data-Driven VC which is all about becoming a better investor with Data & AI. Join 32,260 thought leaders from VCs like a16z, Accel, Index, Sequoia, and more to understand how startup investing becomes more data-driven, why it matters, and what it means for you.
Brought to you by Deckmatch - Agentic Workflows and APIs for Data-Driven VCs
Connect your top-of-funnel to Deckmatch and transform pitch decks and URLs into structured and insightful data. Get detailed firmographic and people data, in-depth competitive and market analysis, and personalized investment memo without lifting a finger. The cherry on the cake? It's all seamlessly synced to your preferred tools like Affinity through our API integrations.
Never miss a deal, ditch the donkey work, and build meaningful relationships faster.
Hi there!
We hope you enjoyed the first day of our Virtual DDVC Summit as much as we did. If you missed some of the sessions, youāll be able to access the recordings until next week. Before we get started with the second conference day, letās dive into a frequently and oftentimes controversially discussed topic: Fundraising.
Why is fundraising such a pain?
Raising capital is one of the toughest decisions for founders as itās not only directional for your future equity story and path to success but also - in most cases - very time-consuming. Getting it wrong can cost you money and momentum.
But what do you actually need to get right? Components include timing, balancing supply (=round size) and demand (=investor interest) to maximize capital raised while minimizing dilution, as much as getting the right partner and investment firm backing you.
Whatās important to keep in mind: Not all capital is created equal.
There are predatory investors, shifting market conditions, and evolving expectations as your startup grows. Early-stage founders need to focus on vision and storytelling, while later-stage startups must emphasize traction and efficiency. Understanding these nuances can mean the difference between securing a fair deal and giving up more control than necessary.
In this episode we will examine fundraising by stage, helping founders navigate investor expectations, negotiate better terms, and raise the right amount at the right time.
Fundraising requirements per stage
Fundraising is not (only) about securing capital. Itās about aligning your financial strategy with the expectations of investors at each stage.
The amount you raise, whom you raise it from, and how you justify it will evolve as your startup grows. Hereās a science-backed summary of how funding needs to shift from seed to late-stage rounds.
Seed Stage: Building the Foundation (Kanayo et al., 2023; Dat, 2021; Bernstein et al., 2017)
Startups in the seed stage typically raise between $10k and $2M, with angel investors and seed funds being the primary sources of capital. At this point, funding is used for completion of your founding team, product development, and market validation. Investors in this stage focus on three main factors:
One or more founders with unique insights into the market: founder-market fit.
A clear problem to solve with sufficient market potential.
A unique product differentiation that is not yet served.
Angel-backed startups tend to have higher survival rates and better access to future funding, making it crucial to secure investors who bring not just capital but also strategic guidance.
Early Stage: Scaling Operations (Miyamoto et al., 2022; Bernstein et al., 2017; Spiegel et al., 2015)
Once a startup has validated its market and developed an initial product, it moves into the early stage, where typical funding rounds range from $2M to $10M. The primary goal shifts toward market entry and operational scaling, requiring larger investments from institutional VCs. To attract funding at this stage, startups need to demonstrate:
A capable and complete founding team.
Early traction and user adoption: product-market fit.
A proven market opportunity with high growth potential.
Investors in this stage are looking for startups that can prove they have more than just an ideaāthey need to see market demand, initial revenue, and a path to profitability.
Growth Stage: Expanding Market Presence (Ewens & Farre-Mensa, 2021; Honore & Ganco, 2020; Singh & Subrahmanya, 2020)
Funding rounds in the growth stage typically range from $10M to $30M. The focus shifts to aggressive scaling, expanding into new markets, hiring key executives, and refining operational efficiencies. Investors here are primarily large venture capital firms and private equity players, who prioritize:
A scalable go-to-market motion.
Strong non-founder leadership team.
A competitive edge and sustainable differentiation.
By this point, investors are less concerned with vision and more focused on measurable performance and metrics like ARR, relative growth, NDR, cohorts, CAC, LTV, and profitability trends.
Late Stage: Prepping for an Exit (Ewens & Farre-Mensa, 2019)
For startups reaching the late stage, funding rounds typically exceed $30M. At this point, capital is raised for IPO preparation, acquisitions, or major expansion efforts. Investors (often late-stage VCs, institutional investors, and (cross-over) hedge funds) are looking for:
Strong governance structures.
High revenue growth with proven profitability.
A clear path to public markets or acquisition.
Late-stage funding is about fine-tuning the business for an exit strategy. Missteps in governance or financial planning at this stage can cost founders control or dilute their stake significantly.
Next, weāll break down how to quantify capital needs at each stage, ensuring that fundraising aligns with operational realities and industry benchmarks.
āļø KEY INSIGHTS
Startup fundraising evolves at each stage, from securing early angel investments for team completion and early product development ($10Kā$2M) to attracting institutional VCs for finding product-market fit and scaling operations ($2Mā$10M).
Growth-stage startups ($10Mā$30M) need to demonstrate traction, industry positioning, and financial efficiency, while late-stage companies ($30M+) focus on governance, profitability, and IPO readiness.
Understanding these shifts helps founders raise the right amount, justify their ask, and negotiate better terms.
Quantify your funding needs
Determining the right amount of capital to raise is critical for a startupās success. A structured approach ensures you secure enough funding without excessive dilution or unnecessary financial strain.
Hereās a step-by-step guide to accurately assess your funding requirements.