Blog by Claire Fauquier / Aug. 21, 2017

Understanding Early-Stage Venture Financing Stages

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As an investor, I often get asked how much money a company should raise and what they should do with it. I don’t like answering that question, because I don’t know the answer. And I don’t think I should know the answer – it’s their company, not mine. However, what founders are really trying to understand is what investors tend to look for and what will increase their chances of success in fundraising. For that, I tend to explain what various stages of financing mean to me, and our firm, Corigin Ventures.

As background: we at Corigin are dedicated Seed-stage investors. We write our initial checks at the Seed stage and then focus our efforts on helping our founders get to a Series A. We look for outstanding founders who are creating businesses and concepts that are impacting daily living. In practicum, this has led to a concentration in consumer, marketplaces and proptech investments. As Corigin grows, we have recently introduced a formal Pre-Seed program to fully support strong founders and align ourselves well along the fundraising ‘stack’.


Once a founder’s been working on an idea for a couple months and has a stack of napkins that have been scribbled to death, they’re ready to take this on. But, resources are required. A founder has probably put a decent amount of savings into testing the initial concept, but it’s hard to do alone. Since there’s very little that’s been done or proven out, initial investors will be investing in the only proven asset, you, the founder. This round is generally somewhere between $100-300k and consists of family, friends, former colleagues and bosses. In essence, people who know the founder is smart and will blindly put money towards something he or she does.


Some founders may skip this stage if they’ve got enough cash in their war-chest from their savings and/or an F&F round, or they’re more able to bootstrap. Similarly, there may be some founders who bypass an F&F round and go directly to this stage.

A Pre-Seed or Angel round is also very early: most founders have quit their day jobs and begun working on the idea full-time. They probably don’t have any employees because they don’t really have any money for salaries. There’s a strong concept with a decent amount of early research behind it. Founders have proven they’re dedicating all their time to the idea. A Pre-Seed or Angel investor understands that there’s still so much to prove out and so won’t focus on business model as much as the characteristics of the founder, along with the overall ‘blue-sky’ market opportunity. An investor will look for ambition, drive, commitment, hustle, smarts and vision in founders.


Generally, when a company is ready to raise a Seed round, they’ve hired one or two initial employees (along with the founding team) and have identified key holes in the early organization. Product has been developed and is either in market testing or in early releases. Depending on the type of company, some early sales figures may be available. When founders are ready to raise a Seed, they’ve done all the heavy research and are ready to really begin testing.

The importance of the Seed round is to begin with a couple hypotheses and a plan to test each of them, so that at the Series A, the company has a much better idea of what the ‘Playbook’ will start to look like. This is an important point to emphasize: investors don’t expect a founding team to have everything figured out when they’re raising a Seed. In order of importance, we look for: (1) founder strengths and unique abilities**, (2) market opportunity, and a distant (3) business model. At these early stages, very few ideas are unique or proprietary. We want to invest in the people who will out-execute a crowded space and be adaptable enough to ensure they’re competing in the right space within a market. Business models can and likely will pivot: as long as a founder is listening to customers and adapting for the right reasons, we’ve invested in the right people.

As mentioned, we expect founders to have a number of question marks when they approach us for a Seed raise. These questions will likely be around things like: pricing, customer acquisition costs and channels, addressable market, etc. We don’t expect these to be figured out, but we want a plan to test them over the following 18 months. Understanding how a founder thinks, plans and hires is the number one goal of analyzing a Seed-stage deal.

**At Corigin, we think a lot about how to quantify founder strength and ability. We look at winning combinations of teams and their unique attributes, which generally comes down to ‘founder-market fit’. We believe that some inherent understanding and expertise within a space, combined with excellent technical and operating skills create a winning formula. In essence, ‘why you’?


If the Seed stage is for testing hypotheses, the Series A is for pressing the gas pedal. Series A investors will expect Seed companies to have conducted their early tests to understand product, customers, organizational strengths and their industries – this is often referred to as ‘finding product-market fit’. At this stage, it’s time to get off to the races! It’s ok if results over the past 18 months or so haven’t been the rocket ship that may have been expected, so long as there is the formation of a Playbook and the beginning of an addressable operating plan.

This large raise will be used to pump dollars into marketing and increase the top-of-the-funnel significantly. Now that the company knows that acquisition channels 1, 3 and 7 are most efficient, they’ll need to go out and execute on them to significantly drive growth forward. This is the stage where topline growth really matters and Series B investors will need to see that rocket ship propel. So strap in, and get going!


As we’ve grown our fund over the past three years, we’ve constantly improved our ‘formula’ for what we look for and how we assist our portfolio companies. We’ve never waivered from our main goal, which is to dedicate ourselves to the Seed stage and optimize like crazy. We partner with outstanding founding teams at the Seed stage and work our hardest to get them to Series A, by only focusing on this stage. These crucial 18-24 months from Seed to Series A are where we’ve developed, and continually refine our expertise, which we refer to as “The Repeatable Playbook”. Then, we can hand things over to best-of-breed Series A investors and beyond.

Along with this ethos, we’ve recently formalized a Pre-Seed program. Deploying a couple smaller checks per year ($100k), we’ll invest in promising early startups helmed by exceptional leaders who are not yet ready for a true Seed. We’ll work closely with those leaders, get to know them from the inside, and set specific milestones. If they successfully hit those milestones, it’s likely we’ll offer to lead their Seed round before even having to go to the market for an official fundraise.

As always, please reach out here or on Twitter to discuss any of these points further – would love to chat!

*Note: these ranges are estimations, based on anecdotal evidence of round sizes in New York City financings.