Venture capital funding benchmarks for startups


1	Business development phase	FOUNDING PHASE		SCALE-UP PHASE		STRATEGIC-GROWTH PHASE
2	Funding round	Preseed	Seed	Series A	Series B	Series C	Series D & beyond

3	Goal	Reach/achieve product-market fit		Maximize speed of growth		Integrate or exit
4	Entry criteria for each phase	Pilot ready to test with real customers; founder(s) or team leader(s) in place; lean funding plan based on 6 to 18 months runway to validate key hypotheses		Market appetite for product is validated by paying customers; unit economics tested; leadership team hired; business plan delivers rapid scale in 3 to 5 years		Business model validated through scaled economics; first-class and scaled operating team in place; business plan transitions to lower-growth phase
5	Evaluation criteria: traction & product-market fit (PMF)	Pre-product, or pre-launch, or launched but pre-revenue, or launched but with very-early customers (2-10 who can serve as references); raising money to get product to market for early market feedback; evidence of problem-market fit with strong indication of a large opportunity (based on customer validation or user interviews)	Product is launched with some traction (usage or revenue) and loved by early users with strong engagement and stickiness which validated a real business opportunity; raising money to further develop product and a compelling Go-to-Market (GTM) strategy to get into a large Total Addressable Market (TAM) over time; strong founder-market fit	Early/clear evidence of PMF with meaningful traction (e.g. $1M ARR) high usage, low churn, high net promoter score, etc.; strong customer references, compelling "why now", and large TAM potential; team growing to support growth and product expansion	Predictable, scalable and profitable sales-&-marketing machine that is able to unlock new levers of growth; evidence of strong PMF, signs of a succesful brand, platform, data play, and unique position in a multi-billion dollar market with more than $300M ARR potential
6	Employees size (persons)	3 (1 - 8)	18 (8 - 38)	76 (38 - 151)	151 (76 - 151)	151 (76 - 251)	351 (251 - 351)
7	Monthly recurring revenue (MRR in USD)	$21K ($0 - $42K)	$167K ($42K - $167K)	$500K ($167K - $500K)	$1.25M ($500K - $1.25M)	$1.25M ($500K - $2.92M)	$4.17M ($2.92M - $4.17M)
8	Annual recurring revenue (ARR in USD)	$250K ($0 - $500K)	$2M ($500K - $2M)	$6M ($2M - $6M)	$15M ($6M - $15M)	$15M ($6M - $35M)	$50M ($35M - $50M)
9	Year-on-Year (YoY) growth rate (%)	20% (10% - 50%)	100% (41% - 304%)	60% (35% - 193%)	65% (29% - 121%)	35% (23% - 47%)	43% (13% - 50%)
10	Monthly burn rate (USD)	$6K ($1K - $60K)	$50K ($50K - $175K)	$375K ($50K - $625K)	$375K ($175K - $1.25M)	$375K ($175K - $1.09M)	$275K ($175K - $1.25M)
11	Investment size (USD)	$1M ($100K - $1.65M)	$3M ($500K - $5.55M)	$15M ($8M - $20M)	$43M ($25M - $63M)	$63M ($43M - $113M)	$88M ($43M - $200M)
12	Equity stake (%)	5% - 15%	20% - 27%	13% - 25%	10% - 17%	5% - 8%	2% - 10%
13	Post-money valuation (USD)	$2M - $11M	$2.5M - $20.6M	$61.5M - $80M	$250M - $370M	$860M - $1.4B	$1.5B - $2.2B
14	Funding sources	Founders, friends, family, angel investors, incubators, accelerators, micro-VCs, dedicated preseed venture studios, grants offered by governments or non-profit organizations or universities, startup competitions, dedicated preseed VCs	Angel investors, accelerators, micro-VCs, seed VCs, dedicated seed venture studios, solo capitalists, grants offered by governments or non-profit organizations or universities, startup competitions	Super angels, seed VCs, early-stage VCs, solo capitalists, grants offered by governments or non-profit organizations, startup competitions	Early-stage VCs, growth VCs, solo capitalists, government grants, startup competitions, secondary market in private equity	Growth-stage VCs, late-stage VCs, CVCs, solo capitalists, secondary market in private equity, private equity funds, investment banks	Late-stage VCs, private equity funds, CVCs, family offices, IPOs and SPACs (public markets via stock exchanges), hedge funds, SPVs and secondaries, investment banks, buyout funds, sovereign wealth funds
15	Defensibility moat	Great ideas with proof-of-concept or MVP (Minimum Viable Product)	Great tech with product development velocity	Early signs of an emerging mini-brand	Increasing conviction that you can create strong defensibility (e.g. by leveraging proprietary algorithms and data, network effects, etc.)
16	Evaluation criteria: conviction	Prove: pre-PMF with non-to-early revenue while proving the hypothesis; belief in $10M+ ARR potential		Build: PMF with revenues, building organization with repeatable and scalable sales, and GTM growth playbooks; conviction in $100M+ ARR potential	Scale: pushing ARR to multi-million with a method for strong profitable growth		Breakout: possible fund returner
17		Belief capital = crowdfunding (community) to angel	Proof capital = seed to pre-series A	Scale capital = series A to series B		Exit capital = series C to pre-IPO and beyond
18		Primarily evaluating the founders' clear, ambitious, and enterprising vision	Primarily evaluating the team's strength and product differentiation	Primarily evaluating the growth traction		Primarily evaluating the validated strong business unit economics for further market expansion and great returns
19	*Last updated on 1 September 2022
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21	Note:
22	1) Disclaimer: The information shared above is for general reference only and do not constitute any legal, business and/or investment advice; please check the accuracy and verify the information
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24	2) Post-money valuation = investment size (USD) / equity stake (%)
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26	3) Should you wish to estimate your pre-revenue business valuation with proven models and frameworks, you may use our roiquant's pre-revenue business valuation simulator
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28	4) Published by Paul Lee, D.T.C. Lai, and Josshua Chong of roiquant.com - an affordable decision support system offering founders actionable insights to build strong competitive businesses and generate high ROI
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30	5) These venture capital funding benchmarks for startups were adapted from Index Ventures (Rewarding talent: a guide to stock options for European entrepreneurs, 2017), Brex (Startup cash burn report, 2018), Parul Singh (Seed gradient, 2018), Sebastian Quintero (Predicting a startup valuation with data science, 2019),
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32	Point Nine (SaaS funding napkin, 2016-2022), OpenView Venture Partners (Financial & operating benchmarks, 2021), Jonathan Kendall (Understanding the pre-seed ecosystem, 2021), McKinsey & Company (Scale or fail: how incumbents can industrialize new-business building, 2021),
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34	Courtney Powell (COO & Managing Partner of 500 Global, 2022), Fred Destin (Founder of Stride VC, 2022), Ben Murray (Founder & SaaS CFO of The SaaS News, 2022), Leo Polovets (General Partner of Susa Ventures, 2022), and Parul Singh (Partner of Initialized Capital Management, 2022)
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36	6) Citation and republishing: roiquant's articles and reports may be republished in accordance with our Citation Policy and Terms of Service