Startup funding stages, in order: friends and family to Series A

A venture capitalist who hands you $100 is not doing you a favor. They are underwriting a bet that gets them $500 to $700 back, hoping for $1,000, because most bets in their portfolio will not work at all. Misunderstand that math and you will pitch the wrong story to the wrong person at the wrong stage. Here is the whole ladder, from your first friends-and-family dollar to the term sheet that puts someone on your board, and what each rung expects from you.

The full walkthrough is below. Everything after it is the written version, so keep reading if you would rather skim than watch.

Should you raise venture capital at all?

Ask yourself this first: could this business, if everything breaks right, get to $100 million in revenue? That is the number venture investors use as a yardstick, because once a company clears it, an IPO or a real acquisition becomes possible. Most VCs never see an exit from most of their bets. They only need one, two, or three companies in a whole portfolio to pay for everything else, so they swing for big wins and walk past small, steady ones. If this business tops out well short of $100 million, venture money is the wrong tool. Not a moral failing, just a mismatch, and there is cheaper money for a business shaped like that.

The second question is about control, not size. Do you want to sell this business someday, or run it for decades and hand it down? If you want to keep it forever, do not raise venture funding, because investors become stakeholders with board seats the moment you take it, and a founder can end up with just 10 to 15 percent of their own company. Boards can vote a founder CEO out, and this happens more often to women and Black founders, who get told they are not "the right person" for the next stage after the money is already spent.

I work for the board. I am employed by the board.

If your business could plausibly reach $100 million and you are fine sharing power to get there, keep going.

What are the startup funding stages, in order?

Each stage answers a different question about your business, and a different kind of check-writer shows up for each one. If you want the deeper mechanics of running an actual raise, from materials to term sheet, the full process is here. This post is about the ladder itself and the relationships that move you up it.

An angel round often lands around $300,000 across five to ten people, meant to get you to pre-seed or seed, not fund the whole business. Series A is where most companies stop, because they spend their seed round without building the metrics that justify the next check. If you are still deciding whether your traction is pre-seed or seed shaped, the bar shifts more than most founders expect.

What does a VC want to see in your deck?

Your deck answers, in order: what problem you solve, who has it, how big the total market is, and the smaller slice you can realistically serve. Then comes the harder question: why you, specifically, and not "Joe Schmo" doing the same thing next door. Being smart or having gone to a good school is not a moat. A real moat is structural: a built-in audience, deep industry connections, unusual access to capital, real intellectual property, or technology that is genuinely hard to copy. In a world full of AI tools, that last one is getting harder to prove.

Close the deck with what you will do with the money and how it gets you to the next milestone. Never tell a VC that once they fund you, you will not need to raise again. Even if it is true, do not say it. There is a name for founders who plan to stop after their seed round anyway: seedstrapping, bootstrapping the rest of the way instead of raising again. Some VCs are warming to it as AI lets teams do more with less, but most still do not love hearing it out loud.

How do you build relationships with VCs before you need them?

You do not walk up to a VC and ask for money. You meet them at conferences and industry events, months or years before you need a check, and build a real relationship: follow them on LinkedIn and Substack, track every touchpoint in a spreadsheet. About three months before you open a round, tell them so, then send monthly updates that show you are organized, executing, and getting results. By the time the round opens, the conversation is already warm.

Skip the associates. They mine for information, not write checks. You want a partner or principal, someone in the weekly deal meeting where investments get decided.

Google Ventures led my Series A, and my lead investor there was a person, not just a fund, someone who took bi-weekly calls with me and made sure I got what I needed because the firm had made a real bet on us.

Why you want a lead investor, not just money

Once you have a real pipeline of relationships, you want to create competition for a term sheet. The lead investor writes the biggest check, takes a board seat, runs diligence, and writes the terms with their legal team. Other investors can join without leading, called a party round, where everyone signs onto the terms the lead already set. A party round can close a raise, but a lead is someone genuinely committed to you over time, someone who opens doors and fights for you internally at their own fund.

A lot of Black founders and women founders never land a lead, and it costs them for years: no firm truly advocating for you, no one handing you invitations you would not otherwise get. Do not settle for a casual "yes, I'm in." Ask directly if they will lead, and interview them back the way they interview you. You are entering a relationship that can last seven to ten years, so vet it like one.

Worked example: the milestones behind one Series A

When Blavity started fundraising, the first metric was not revenue at all. It was a million monthly unique visitors. Once that was real, the next target was a million dollars in revenue. After that came the jump from one to three million, because the growth VCs want is not incremental, it is a multiple.

Those milestones turned a warm relationship with Google Ventures into a term sheet. After that Series A, the pace of leapfrogging every metric every year stopped making sense, and that is a legitimate stopping point too. Venture funding is a tool for a specific stretch of a company's life, not a permanent operating mode.

The named framework: the Joe Schmo test

Before you write a single slide, pressure-test your moat with this.

Do this next

Write one sentence answering whether this business could realistically reach $100 million in revenue, and one more answering whether you are genuinely fine sharing control to get there. Those two answers decide whether you should be building a pitch deck this quarter or building revenue instead. If you want a room of founders working through exactly this kind of decision every week, that is what the WorkSmart community is for.