Raising capital for startups, end to end

1. 1
   Decide whether, when and how much

   Raise against milestones, not the calendar: enough for 18 to 24 months of runway to the proof points the next round needs. Start preparing with about 12 months of cash left.

2. 2
   Get the company in order

   Delaware C-corp, vested founder stock with 83(b) elections, IP assigned to the company, and a cap table that matches the paperwork.

3. 3
   Get your numbers diligence-ready

   Clean monthly books, a model that ties to your actuals, a tidy cap table and a data room, before the first meeting.

4. 4
   Know which instrument your stage uses

   SAFEs when raising from angels and pre-seed funds; a priced round once a lead investor offers terms; debt to stretch runway after an equity round.

5. 5
   Build the deck and the investor list

   A deck that tells the story, a target list filtered by stage, sector and check size, and a plan for warm introductions.

6. 6
   Negotiate the term sheet

   Preference, board, option pool and protective provisions often matter more than the headline valuation.

7. 7
   Diligence and close

   Expect requests for financials, contracts, IP assignments and the cap table. Fast answers keep momentum.

8. 8
   After the wire

   Update the cap table, refresh your 409A, file what needs filing, and start the investor update rhythm.

The four kinds of equity investor want different things, move at different speeds and ask for different terms. Knowing which one you are talking to tells you what to prepare and what to expect in the term sheet. On a phone, swipe across the four cards.

Check sizes and dilution are medians and typical ranges from Carta, the Angel Capital Association, Cooley and PitchBook, checked November 2026. Your round will differ. Unfamiliar terms are defined in the fundraising glossary at the end of this page.

Classic buyouts rarely fit a startup: they want control, cash flow and room for debt. Growth equity is the part of private equity that does fit some later-stage companies. It takes a minority stake, often 10% to 40%, in a business that is profitable or close to it and still growing, commonly 20% a year or more. It suits a company that wants a large round without a buyout, or that has outgrown the venture model. Expect buyout-style diligence: audited or reviewed financials and a quality of earnings report (an outside accounting firm's check of your profit figures).

Angels and pre-seed funds lead at pre-seed. Seed funds and angels share seed rounds. Venture firms lead from Series A, with strategics often joining. Growth equity and private equity come in once a company is profitable or nearly so. Medians are from Carta's 2026 round benchmarks and pre-seed data; they move by quarter and sector (AI rounds run higher), so treat them as a rough guide.

• Valuation benchmarks by stage
• Preparing for Series A
• Series A ARR benchmarks

Most companies end up with several kinds of investor, and their terms interact. A few to plan for:

• Strategic rights can deter later investors and buyers. A right of first refusal or early notice on a sale can make other acquirers hesitate. Ask any corporate investor up front whether it wants a right of first refusal, notice rights or exclusivity; many ask for none.
• Many small SAFEs add up. Each converts at the priced round, and together they can take more ownership than the founders expected. Model them before you sign the next one.
• Pro rata rights stack. Early investors with pro rata rights can claim part of the next round, which leaves less room for a new lead.
• Debt sits ahead of equity. Venture debt covenants and warrants need to fit with what your equity investors expect.

• Cap table management
• SAFE conversion and cleanup
• The governance gap of SAFE rounds

Investors check these early, and each takes weeks to fix once a term sheet is on the table:

• A Delaware C-corporation. Venture investors expect one. An LLC usually converts before the first priced round, and often before the first SAFE.
• Vested founder stock. Typically four years with a one-year cliff, with an 83(b) election filed within 30 days of each grant. Investors in a priced round may ask to restart or adjust vesting.
• IP assigned to the company. Every founder, employee and contractor should have signed an assignment, including for work done before incorporation.
• A cap table that matches the paperwork. Every share, option, SAFE and note recorded, with board approvals on file.
• Current books and filings. Monthly financials, Delaware franchise tax, and federal and state returns.

• How to file an 83(b)
• Cap table management
• Delaware franchise tax calculator

• Build a target list before the first meeting. Filter by stage, sector, check size and whether the fund leads rounds. A fund that writes $500K checks into seed rounds cannot lead your $15M Series A, however friendly the partner.
• Get warm introductions, and build them if you don't have them. An introduction from a founder the investor backed, or from another investor, gets read far more often than a cold email. Without a network, start with founders one or two years ahead of you, angels who already know your space, and accelerator and operator communities. Give introducers a forwardable email: three or four lines on what you do and why now, plus the deck.
• Expect a wide funnel. Seed founders often contact dozens of investors, sometimes 50 to 100, to close one round. Track every conversation and follow up with short updates.
• Find a lead. Priced rounds need a lead investor to set the price and terms; others follow. Spend most of your time on likely leads and line up followers once a term sheet is close.
• Match the process to the round. SAFE rounds usually close one check at a time, so the first committed check is the hardest and the most valuable. Priced rounds work best when first meetings are batched into two to four weeks, so interest builds together and term sheets arrive together.
• Have the materials ready. A deck that tells the story, a model that ties to your actuals, and a data room you can open the day someone asks.

• How investors evaluate startups
• Beyond the pitch deck
• Fundraising as a solo founder
• Readiness and diligence

• Pre-wire one to two months ahead. Reconnect with the partners you want to lead before the formal raise, with a short update on progress since you last spoke.
• Compress the partner meetings into the same week or two, so competing term sheets can arrive together.
• Talk to your existing investors early. Whether they take their pro rata, and how much room that leaves for a new lead, is read as a signal by new investors.
• Reference-check the partner who would join your board, including founders whose companies struggled.
• Compare term sheets on more than price: post-money, option pool, liquidation preference, board seats and protective provisions. An exploding deadline is a negotiating tactic, not a law.

• Priced rounds and term sheets
• Preparing for Series A
• Series A ARR benchmarks

An accelerator invests a small amount for a fixed stake and runs a program that ends in a demo day, where many companies raise their next round. The best-known terms are Y Combinator's standard deal: as YC publishes it, $500,000 on two SAFEs signed together, $125,000 for 7% of the company and $375,000 on an uncapped SAFE that takes the best terms of SAFEs issued later. Other programs offer less money for a similar or larger stake. Weigh the stake against what the network, the program and the demo day are worth to your next round, and model it in your cap table like any other SAFE.

• How SAFEs work
• SAFE calculator

• Debt vs equity
• SAFE vs priced round
• Convertible notes vs SAFEs

A revenue-based financing provider advances cash and takes a fixed share of your monthly revenue until a set multiple of the advance is repaid. There is no equity and usually no board seat, and repayments flex with revenue. It suits companies with steady recurring revenue and healthy gross margins, often for funding marketing or inventory where the payback is predictable. The cost is higher than bank debt, so compare the effective annual rate, not just the multiple, and check what happens if revenue dips.

• Revenue-based financing vs equity vs debt

SBIR and STTR awards fund research and development at small US companies through federal agencies, in phases from feasibility to development, without taking equity. They take time to win and come with reporting duties. After a six-month lapse, Congress reauthorized both programs in April 2026 through September 2031; check SBIR.gov for open solicitations, since some agencies were slow to reopen them.

The federal R&D tax credit is the other big one. A qualified small business (under $5M in gross receipts and no more than five years of receipts) can elect to apply up to $500,000 a year of the credit against payroll taxes, for up to five years. The first $250,000 offsets the employer's Social Security tax and the rest offsets the employer's Medicare tax, and the offset begins in the quarter after you file the income tax return that makes the election, so the cash arrives later than founders expect. Since 2025, US research costs can again be deducted in the year they are incurred. Many states add their own credits.

• R&D tax credit calculator
• Tax & compliance

A bridge buys time to hit the milestones the next round needs. It usually comes from existing investors on a SAFE or convertible note, sometimes with a lower cap or a bigger discount than the last round. A bridge with a clear milestone and a date reads as discipline; one without them can signal trouble to new investors. Before raising one, model the runway it buys and what it does to ownership at conversion.

• Convertible notes
• What if you can't raise?
• Down round impact

Regulation Crowdfunding lets a company raise up to $5 million in 12 months from the public through an SEC-registered funding portal or broker-dealer, with disclosure and financial-statement requirements that scale with the amount raised. Regulation A+ allows larger offerings with more disclosure. Both can turn customers into owners, but they add many small holders to your cap table, so plan how they will be held (often through a single vehicle) and how later investors will view them. Securities counsel should run the offering; see the SEC's guide to Regulation Crowdfunding.

Selling shares, SAFEs or notes is selling securities, so every round needs an exemption from SEC registration. Your lawyer handles the filings, but founders should know the rules that shape who they can talk to and how:

• Accredited investors. Most rounds sell only to accredited investors: broadly, individuals with $200,000 of income ($300,000 with a spouse) or $1 million of net worth excluding their home, plus certain licensed professionals and entities.
• Rule 506(b). The usual exemption for venture rounds. No general solicitation (no public advertising of the round) and unlimited accredited investors. It technically allows up to 35 non-accredited but sophisticated investors, but including even one triggers disclosure close to a full offering, including financial statements, so most early rounds take accredited investors only. Ask your lawyer before taking a check from friends or family.
• Rule 506(c). Allows public announcement of the raise, but every buyer must be accredited and you must take reasonable steps to verify it. Since a 2025 SEC staff letter, a high minimum investment ($200,000 for individuals) plus a written representation can count as reasonable steps.
• Form D. Due within 15 days of the first sale, which in a rolling SAFE round can be the first signed SAFE, months before the round "closes". File during the round, plus notice filings in the states where investors live.

The practical point: don't post about an open round on social media unless your lawyer has set it up under 506(c), and keep a record of who invested and how they qualified. The SEC's exempt offerings guide covers the details.

Raise when you can show the proof points the next investor will pay for, and before runway forces your hand. Start preparing with about 12 months of cash left: two to three months to get ready, three to six months to raise, and a buffer for a slow market. Under six months, you are raising from weakness. Size the round to reach the next set of milestones with a buffer, commonly 18 to 24 months of runway, and work back from what that plan costs rather than from a target valuation.

• When to raise money
• How much to raise
• Burn rate and runway
• Urgency vs FOMO

• Starting too late. Begin preparing with about 12 months of cash; under six months, you negotiate from weakness.
• Raising too little. A round that doesn't reach the next set of milestones forces a bridge.
• Stacking SAFEs without modeling them. The dilution arrives all at once at the priced round.
• Optimizing the valuation and ignoring the terms. Preference, pool and board control can outweigh a higher price.
• Letting diligence find the problems. Messy books, missing filings and cap table gaps cost time and price.
• Pitching funds that can't lead. Without a lead, a priced round can't close.
• Giving a strategic investor rights that deter buyers before you understand what they cost.
• Letting the process drag. Momentum is part of the price; a round that stalls gets cheaper.

• Financial red flags
• What if you can't raise?
• Diligence-Readiness Score

• Update the cap table the day the round closes, including converted SAFEs and notes and the new option pool.
• Refresh your 409A valuation. A priced round is a material event, so option grants need a new valuation.
• Issue the paperwork. Stock certificates or book entries for the new investors and for converted SAFEs and notes, and a list of every side letter and pro rata right you granted.
• Check the filings. Form D should already be on file from the first sale; amend it if the round grew, and register in new states as you hire.
• Re-file 83(b) elections within 30 days if the round re-vested any founder stock.
• Put D&O insurance in place. Directors and officers cover is often a condition of a Series A close.
• Start the reporting rhythm your investors expect: monthly or quarterly updates, and board meetings with a proper board pack.
• Protect the new cash. Spread it beyond the $250,000 FDIC limit, for example through a bank sweep account (check options with your bank or investment advisor), and write down who can move money.

• What is a 409A valuation?
• Investor updates
• Board meeting prep

Three tax questions come up around almost every raise. QSBS (Section 1202) can exclude gain on qualifying startup stock. For stock issued after July 4, 2025, the exclusion is 50% after three years, 75% after four and 100% after five, up to $15 million, and the company must have no more than $75 million of gross assets when the stock is issued, so a large round can end QSBS eligibility for stock issued afterward. An 83(b) election on restricted founder stock has a strict 30-day deadline. And secondary sales of founder shares in a round or tender offer have their own tax and 409A consequences. Talk to your tax adviser before the round closes, not after.

• QSBS for founders
• How to file an 83(b)
• Secondary sales and tender offers

Plain-English definitions of the terms you will meet in a raise.

• SAFE
• Post-money SAFE
• Valuation cap
• Convertible note
• Bridge round
• Lead investor
• Pre-money valuation
• Post-money valuation
• Fully diluted shares
• Option pool
• Liquidation preference
• Participating preferred
• Common vs preferred
• Anti-dilution
• Pro rata rights
• Drag-along
• Down round
• Venture debt
• Warrant
• Data room
• Cap table
• 409A valuation
• QSBS
• 83(b) election