March 20, 2023

Startup Fundraising Indicators: A Guide to Evaluating Your Company’s Growth

Startup Fundraising Indicators: A Guide to Evaluating Your Company’s Growth

Startup Fundraising Indicators: A Guide to Evaluating Your Company’s Growth

Jake Dluhy-Smith

CEO, Co-Founder

Fundraising is often necessary for startups to get off the ground, scale their operations, and achieve their goals. However, it can also be a daunting process, especially for first-time entrepreneurs who may not be familiar with the language, norms, and expectations of the investment world. Understanding the key indicators that investors look at can help startups navigate this process more effectively and make informed decisions about their funding strategy.

By tracking and analyzing these key indicators, founders can gain insights into their business and make data-driven decisions about how to allocate their resources, set goals, and communicate with stakeholders. Investors use these indicators to assess the attractiveness and viability of a startup as an investment opportunity and to compare it to other companies in the same market or stage of development.

While there is no one-size-fits-all set of fundraising indicators that applies to all startups, there are some common ones that are often used as benchmarks of success. We've broken down the startup lifecycle into different funding stages and categories. From there, we outlined different indicators to look at depending on the stage and category that your startup is in. The indicators you see are based on 6 years of data and common denominators that we have seen across the 35 startups built at OAK’S LAB.

In this guide, we'll provide an overview of the most important fundraising indicators for startups so that you know how to evaluate your startup's growth and potential.

Pre-Seed Stage

As a pre-seed startup, you are at the earliest stage of building your business. Your team size is typically less than 5 employees, with the founding team and advisors in place, creating a small and nimble team. Your product is a prototype or MVP and is gaining initial traction in terms of user acquisition, engagement, or partnerships. 

At this stage, your revenue is very low or even non-existent, as you are focused on building your product and validating your business model. Your valuation is typically in the range of $1M - $5M, reflecting the early stage of your business, and your funding is likely to be less than $1M, with early-stage investors providing the necessary support to help you get your business off the ground. 

Seed Stage

As a seed-stage startup, you are slowly growing your business and validating your product. With a team size of fewer than 10 employees, you may have your first hires and key team members in place. Your product is likely in the process of validating product-market fit with a growing user base and/or early customers. 

Your revenue is currently less than $1M in ARR, as you are likely still pre-revenue or experiencing early revenue from your first paying customers. Your valuation is in the range of $5M - $15M, and your funding ranges from $1M - $5M. 

Series A Stage

As a Series A startup, your business has progressed beyond the pre-seed stage and is showing promising signs of growth. With a team size ranging from 10-50 employees, you have an established team with experienced management in place to lead the charge. Your product has established product-market fit, with a significant user base or customer acquisition demonstrating your value proposition. 

Your revenue is growing and recurring somewhere between $1M - $10M ARR. At this stage, your valuation typically ranges from $15M - $40M, indicating that your business is on track to scale. Your funding ranges from $5M - $20M, providing the necessary resources to continue expanding your business and driving growth.

Series B and Beyond

As a startup at the Series B stage or beyond, you have likely achieved significant growth and success. With a team size of over 50 employees, you are focused on scaling operations and the team to continue driving growth. Your product has an established market position and may be expanding into new markets, with strong customer retention and/or repeat business. 

Your revenue is over $10M in ARR, demonstrating significant revenue growth and a path to profitability. Your valuation ranges from $40M - $100M, indicating that your company is gaining a strong position in the market. At this stage, your funding is likely to be over $20M, providing the necessary resources to fuel growth and dramatically scale your business. 

Real World Examples

In addition to discussing the key fundraising indicators for startups at different stages of growth, we have also mapped out the startup fundraising journey of two major startup successes, AirBnb and Stripe, in the infographics below. By studying the fundraising journeys of these successful companies, entrepreneurs can gain valuable insights into the fundraising process and the key indicators that investors evaluate at each stage of growth. 

In conclusion, all startups are not the same. The indicators that we have outlined may vary and aren’t going to fit every situation, but with an understanding of these general indicators, you can benchmark your startup to general standards. And you can have a better understanding of where you are in your journey and what you need to focus on in order to get to the next stage.

Subscribe to our quarterly newsletter and receive our latest insights.

Top articles

Unicorns, Exits, and Global Recognition: The Rise of Prague’s Tech Scene

February 1, 2024

A review of Prague's tech landscape post-2020.

The OAK’S LAB WAY: An Introduction to Our Product Development Methodology

January 23, 2023

Our product development methodology designed to take an early-stage startup from pre-seed to series A and beyond.

How to Set Your Startup’s Mission & Vision

March 14, 2023

The twin north stars navigating startup founders and our teams on the journey to build a product that makes a big impact in the world.

Building a Strong Company Culture: The Core Values That Drive Our Success

February 29, 2024

Take a deeper look at the foundational principles that guide everything that we do at OAK'S LAB.

Building Products with LLMs | 7 Tips for Success

August 1, 2023

Over the last few months, we’ve been fortunate enough to work with some startups that have LLM-driven products. Here are the best practices that we’ve learned along the way.