💰 Don't Let These Fundraising Mistakes Kill Your Startup

Here's what investors actually want to see in your pitch—from Pre-Seed to Series C.

👋 Hey, Chris here! Welcome to BrainDumps—a weekly series from The Founders Corner. Every Thursday, I share unfiltered insights and stories from decades of first-hand experience. It’s a Substack exclusive, inspired by topics in my upcoming book, The Big Book of BrainDumps. Let’s get into it! 👇

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Table of Contents

• Why This Guide Matters

• 1. Pre-Seed: From Idea to Something That Could Work

• 2. Seed: Turning Possibility into Proof

• 3. Series A: Scaling What Works

• 4. Series B: Market Dominance Mode

• 5. Series C and Beyond: From Rocketship to Public Market Contender

• 6. Special Cases: Bridge Rounds & Debt

• So… What Should You Do With This Map?

• Final Words: Funding is a Mirror

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Startup Funding Round Guide

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Most founders think fundraising is a staircase.

Climb one step. Then the next. Then the next.

Series A follows Seed. Series B follows A. Simple, right?

Wrong.

In reality, it’s a maze—with some doors locked, others wide open, and the occasional trapdoor beneath your feet. And if you don’t know which room you’re in—or how investors expect you to behave in that room—you’re not just lost. You’re dead in the water.

That’s why we’re looking today at this Startup Funding Round Guide, a visual BrainDump by Majd Alaily that I believe every founder should print out and stick on their wall.

Because while there’s no GPS for the founder journey, this map is as close as it gets.

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Why This Guide Matters

Let me start by telling you about a founder I backed early—let’s call him Dan.

Dan was a technical wizard. Built an amazing dev-tool that devs genuinely loved. Got a bit of usage. Even raised a pre-seed from a decent UK micro fund. Then he hit a wall.

He went out to raise his Seed round… and couldn’t close it.

Why? Not because the product wasn’t good. Not because the market wasn’t big.

But because Dan was pitching Seed investors like he was still at Pre-Seed. He was telling a great vision story… but couldn’t show traction. He had passionate users… but no clarity on scalable growth. And he was baffled when VCs started ghosting.

The truth is, each stage of funding has its own implicit checklist—what you need to prove, what investors expect, and what story you have to tell.

This guide breaks that down beautifully. And in the next few thousand words, I’m going to walk you through it.

Not just as an investor—but as a founder who’s made most of these mistakes myself, and backed dozens more who have, too.

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1. Pre-Seed: From Idea to Something That Could Work

Let’s call this the "hunch & hustle" phase.

You’ve got a concept. Maybe a deck. Maybe an early Figma. Your cofounder still has a day job. You’re pulling 18-hour days and watching Paul Graham videos at 2 AM.

What Investors Want to See:

• A compelling, differentiated concept

• A credible founding team

• Early signs of problem-solution fit (i.e. someone gives a damn)

This isn’t about revenue. It’s about potential.

Think of pre-seed as a bet on the horse and the jockey. The idea should be sharp—but the team’s hunger and clarity are often the clincher.

Personal Take:

When I co-founded my first venture-backed business, we didn’t even have a proper product when we raised pre-seed. What we had was obsession. We knew the problem inside out, and we could talk about the space better than anyone else. That was enough.

But don’t mistake this for charity. Pre-seed investors want to know:

Can you validate quickly, iterate fast, and make something real from nothing?

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2. Seed: Turning Possibility into Proof

Welcome to the "scrappy traction" zone. You’ve got a product. A handful of customers. Maybe a bit of revenue. It’s not consistent yet—but the signs are there.

What Investors Want to See:

• Initial product-market fit signals

• A clear path to scalable growth

• Early GTM repeatability (some channels work!)

• A core team who’ve stopped dabbling and gone all in

The Seed round is about conviction that this can scale. Investors will ask:

• “Can you reliably acquire users?”

• “Do they stick around?”

• “Are they paying—or at least acting like they will?”

One founder I worked with had £15K MRR when they raised Seed. Not huge, right? But their retention was crazy high. Their customers raved. The founder had a plan for how to go from 15 to 50. That was enough to unlock a £1M round.

Pro Tip:

Don’t go to Seed investors with a pre-seed story. They’ll expect metrics, not maybes. Show usage patterns, activation rates, retention curves—even if they’re rough.

Seed is where "we have something" becomes "we know what to do next."

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3. Series A: Scaling What Works

This is the first real institutional raise for most companies. It’s the “prove you’re a machine, not a miracle” round.

You’re not just showing glimmers of PMF—you’ve got customers, revenue, and signs that you can grow systematically.

What Investors Want to See:

• Strong month-over-month revenue growth

• Defined GTM motion that’s repeatable

• Data: CAC, LTV, payback period, churn, NRR

• A plan to get to profitability (even if it’s a few years out)

Series A is a big leap. You’re no longer being judged on vision alone—you’re being judged on execution.

Anecdote:

One of our portfolio companies had bootstrapped to £800K ARR. They thought raising Series A would be easy. But they hadn’t built the dashboards. Their pipeline was fuzzy. Growth was lumpy.

When we helped them build a proper data narrative—complete with cohort analysis, churn breakdowns, and forecast models—everything changed. Investors saw the underlying machine. Term sheets followed.

Series A Pitfall:

Founders often forget that investors need confidence not just in today’s growth, but tomorrow’s predictability. Show your model. Don’t just say "we're growing"—explain how and why it’ll continue.

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4. Series B: Market Dominance Mode

This is where investors want to back a future category leader.

You're generating millions in ARR. You’ve cracked one market—and now you're ready to expand into new ones, launch new products, or go international.

What Investors Want to See:

• Category-defining traction

• Clean financials, efficient growth (e.g. Rule of 40)

• A solid finance + ops team

• Plans for scale: hiring, systems, global infra

By now, you’re expected to operate like a proper business. Series B investors aren’t just betting on upside—they’re managing downside risk.

Founder Truth:

This is the phase where founder burnout spikes. You’re not building just product anymore. You’re hiring executives, managing teams, sitting in endless board meetings.

If you haven’t evolved from scrappy founder to strategic CEO, it’ll show. And investors will get nervous.

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5. Series C and Beyond: From Rocketship to Public Market Contender

This is the "grow up or go public" phase.

By now, you’ve proven that you can scale—and that the economics work. Now it's about solidifying market leadership.

What Investors Want to See:

• Market share dominance

• Highly efficient, scalable operations

• Global expansion strategy

• Exit readiness (IPO or strategic acquisition)

Your narrative shifts from "here’s where we’re going" to "here’s why we’re the one to win it all."

Key Takeaway:

Late-stage capital wants clarity. Your metrics need to sparkle. Your processes need to hum. Your teams need to deliver quarter after quarter.

This is not a time for improvisation. It’s a time for performance.

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6. Special Cases: Bridge Rounds & Debt

Sometimes, life doesn’t fit the neat narrative arc. That’s when bridge rounds and debt financing come in.

Bridge Rounds:

A short-term equity raise to buy you more runway. Often used between rounds if metrics are improving but not quite where they need to be.

Debt Financing:

Raising cash without dilution, often through venture debt or revenue-based financing. Useful if you have predictable revenues and want to preserve equity.

Real Talk:

Use these carefully. If you’re raising a bridge, be honest about why—and what milestone it gets you to. Investors will smell panic. But if you show a crisp, confident plan, they’ll see leverage.

I’ve seen bridge rounds unlock major growth—and I’ve seen them prolong the inevitable. The difference is how brutally honest the founders are with themselves.

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So… What Should You Do With This Map?

Print it. Highlight it. Annotate it with your own metrics.

Use it not as a rulebook, but a framework for clarity. Ask yourself:

• “What stage am I really at?”

• “What story do I need to tell to raise?”

• “What gaps do I need to close before I walk into a room of investors?”

And most importantly—don’t try to skip steps.

We all want to jump to Series A and get the big valuation. But if you haven’t nailed Seed, Series A will be a nightmare. And if you raise too early, you'll either:

1. Get no term sheets, or;

2. Get funding... then drown under the weight of expectations

Neither ends well.

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Final Words: Funding is a Mirror

Each funding round is a mirror.

It reflects how well you’ve understood the market, your customers, your model—and yourself.

I’ve seen founders raise with nothing but a deck… and others struggle with $2M in ARR. The difference? Storytelling, data fluency, and self-awareness.

This Startup Funding Round Guide is your mirror. Use it often. Check your reflection. And keep building.

Because funding isn’t the goal. It’s just the fuel.

The real goal? Building a company that lasts.

—Chris Tottman

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