The funding ladder

In January 2026, one company raised a “seed round” of $480M. Other companies call a round of $500K a seed round. The two use the same word. What does “seed” mean, then, and what comes after it? This lesson gives you the map: the ladder of funding stages from your first dollar to an IPO.

Each round buys time

A startup is an experiment that costs money before it makes money. A funding round is one event in which the company sells part of itself to investors for cash. All rounds have the same logic. The founders tell investors: “Give us sufficient cash to prove the next important thing. Then a larger investor will pay a higher price for the next part.”

That “next important thing” is a milestone: a product that works, users who pay, or $2M of yearly revenue. The round pays for the time to get there.

Months of runway = Money raised ÷ Money spent each month
                 = $4,500,000 ÷ $150,000
                 = 30 months

A company that raises $4.5M and spends $150K each month has 30 months. In those 30 months, it must show sufficient progress for Series A investors. If it cannot, it must raise a bridge, cut costs, or close. The last lesson of this module is about bridges.

The rungs of the ladder

Most venture-backed companies climb the same rungs in the same order. Each rung has larger checks, asks for more proof, and brings a different type of investor.

Before outside investors

Bootstrapping means that the founders pay for the company with savings and customer revenue. They keep 100% of the company, but revenue sets the speed. Many good companies never leave this rung.

A friends-and-family round is a small amount of money from persons who know you, frequently before a product exists. No data source has a reliable median for it. A SAFE or a share is a security, so securities law applies even when the investor is your aunt. The next lesson explains the rules.

Pre-seed: prove that the problem is real

Pre-seed money pays for the first version of the product and the first users. Investors look mostly at the team and its insight. In Q2 2026, 93% of pre-seed rounds on Carta used a SAFE, a contract that converts into shares at a later priced round. One pre-seed round frequently has many SAFEs, so data firms count pre-seed money in different ways.

Seed: find product-market fit

A seed round pays the team to find product-market fit: a product that customers want sufficiently to use and pay for again and again. Seed funds, angels, and the seed programs of large firms invest here. A lead investor sets the terms. In 2025, the median seed lead bought approximately 60% of the round.

Series A: build a growth engine

The Series A is usually the first large priced round. Investors buy Series A preferred stock, and the earlier SAFEs convert into shares. For software, the earlier rule of thumb was $1M of ARR before a Series A. In 2026, one investor named $2M to $3M, and sometimes $4M. Investors also examine the speed of growth, not only its level.

Series B, C, and later: scale

A Series B pays for more of what works: more salespersons, new customer segments, and a full management team. A Series C and later rounds pay for new products, new countries, and acquisitions. Growth equity funds, corporate investors, and crossover funds come into the rounds here. On Carta in Q1 2026, the median company was 2.8 years old at its Series A and 7.4 years old at its Series D.

IPO: the top of the ladder

At an IPO, the company sells shares to the public and lists them on a stock exchange. In 2025, the median US company was 12 years old at its IPO. In Q3 2026, only 18 venture-backed US companies had an IPO.

Predict first

What was the median post-money valuation of a priced seed round on Carta in Q2 2026?

Type a guess before you continue. A guess first, even a wrong one, makes the answer easier to remember.

Your guessSave my guess

Explore the ladder

Select each stage in the widget. Read what the money pays for, who invests, and the medians from two data sources. Then use the bars at the bottom to compare the stages.

Explore

The funding ladder

Select a stage. See what the money pays for, who invests, and the 2026 medians from two data sources.

Stage

BootstrappingFriends and familyPre-seedSeedSeries ASeries BSeries CSeries D and laterIPO

Seed

The search for product-market fit, the first key hires, and frequently the first revenue.

What investors want to see

A product that works, users who come back, first revenue for B2B companies, and signs of strong demand.

Who invests

Seed funds, angels, and the seed programs of multistage firms. In 2025, the median lead bought approximately 60% of the round.

Usual instrument

A SAFE or a priced round. Approximately half of the seed rounds on Carta in 2025 used SAFEs.

Medians for Seed from Carta and PitchBook

Median	Carta	PitchBook
Round	$4.5M	$3M
Pre-money	≈ approximately $19.4M	$18.3M
Post-money	$23.9M	≈ approximately $21.3M
Dilution	19.4%	≈ approximately 14.1%

Carta: priced rounds, Q2 2026. PitchBook: all US deals, Jan to Sep 2026. A value with ≈ is calculated from the other medians: post-money = pre-money + round. The median of many rounds is not equal to a calculation from two medians, so treat these values as approximate.

On Carta in Q2 2026, the median priced seed round raised $4.5M at a $23.9M post-money valuation. The median dilution was 19.4%.

The two sources measure different rounds. Carta counts only priced rounds, and priced seed rounds are usually larger than SAFE rounds. PitchBook counts all the deals that it can find.

Compare the stages

Medians of all US deals, Jan to Sep 2026 (PitchBook-NVCA). Series D+ is Series D and all later rounds.

Median to show

Round sizePost-moneyDilution

Seed

$3M

Series A

$17.4M

Series B

$39.5M

Series C

$77M

Series D+

$150M

Each rung raises approximately 2 to 6 times more money than the rung below it. The bars use one scale, so the seed bar is almost too small to see.

The bars show the shape of the ladder. From seed to Series A, the median round grows almost 6 times, but the valuation grows less than 4 times. Thus, in the PitchBook data, a Series A sells the largest part of the company. After Series A, the valuation grows faster than the round, so each later round sells a smaller part.

Two data sources, two medians

A median is the middle value when you put all the values in order. Two firms publish the medians that the press uses most, and they measure different groups of rounds:

• Carta uses the cap tables of the companies on its software. Its round medians count only priced rounds, so a seed round with only SAFEs is not in them.
• PitchBook records all the US deals that it can find, and small deals too. Its quarterly report gives the median pre-money valuation.

The two tables do not agree, and the two are correct. The Carta seed round is larger because priced seed rounds are usually larger than SAFE rounds. For “a typical priced seed round,” use Carta. For “the full market,” use PitchBook.

The PitchBook dilution column is a calculation: the median round ÷ (the median pre-money + the median round). The two medians come from different deals, so the result is only an approximate guide. Carta measures the dilution of each deal and then takes the median, so its value is a real median of dilution.

Work it out

A seed investor puts $4.5M into a company at a $19.4M pre-money valuation. What part of the company does the investor buy?

Your answerCheck

The median is not a target

Startup valuations have a long upper tail. A small number of rounds are many times larger than the others:

• On Carta in Q1 2026, the 90th percentile seed valuation was almost 4 times the median. At Series A, it was almost 5 times the median.
• In the 12 months to Q1 2026, the middle half of seed post-money valuations on Carta went from $12.4M to $35M.
• In Q2 2026, the 95th percentile seed valuation on Carta was $200.4M. One year before, it was $72.2M.

The news reports the top of this tail, because large rounds make good headlines. If you compare your round with the news, all offers look small.

What each rung costs the founders

Each round sells a part of the company. The founders keep their shares, but their percentage decreases. This decrease is dilution. Dilution multiplies: each round takes its part from what is left after the earlier rounds.

Worked example · step 1 of 5

Northwind climbs three rungs

1. 1

   Start

   Ada and Ben own 100% of Northwind Labs. To keep the example clean, the company has no option pool.

Show step 2Show all steps

The lesson on dilution across rounds adds the option pool and the later rounds to this example. For now, remember the pattern: the part that one round sells looks small, but the parts multiply.

Work it out

Northwind raises a $4.5M seed round and spends $150K each month. For how many months does the seed money last?

Your answerCheck

Why stage names are loose

No law defines “seed” or “Series A.” A stage name is the name that the company, its lawyers, and its investors use. It usually agrees with the name of the preferred stock. Data firms also put the same round in different stages. For example, PitchBook gives the label “pre-seed” to the first institutional round of a company less than 2 years old, if nobody named the round.

The names also change over time, because rounds become larger:

• The PitchBook median Series A pre-money valuation increased from $21M in 2020 to $62M in Q1 2026.
• The median Series A deal increased from $7.5M to $19.6M in the same period.
• In 2021, one writer called $4M to $8M a “classic Series A.” The 2026 median seed round, $3.0M to $4.5M, is near the bottom of that range.
• In the first 4 weeks of 2026, rounds of $100M or more got more than 40% of the seed and Series A dollars worldwide.

The medians also mix very different companies. On Carta in Q1 2026, the median Series A post-money valuation was $55M for non-AI companies and $65M for applied AI companies. For companies that build foundation models, it was $300M. The lesson on how valuations are set explains this AI premium.

If my seed round and my Series A are at the medians, is my step-up the ratio of the two medians?

No. The companies that raise a Series A this year are not the companies that raise a seed round this year. They raised their seed rounds approximately 2 years before, at lower prices, and only the strongest got to Series A. In 2026, PitchBook measured a median step-up of 1.5x for non-AI companies and 2.2x for AI companies. The ratio of two stage medians is much higher than these values.

Quiz · question 1 of 6

Test what you learned

Which statement about stage names such as "seed" and "Series A" is the most accurate?

• AA Series A must be $10M or more.
• BStage names are conventions, and data firms put rounds in stages in different ways.
• CThe SEC defines each stage by the size of the round.
• DA seed round cannot be more than $5M.