Startup funding can be an ongoing process, with some companies raising multiple rounds even when they already have significant revenue and a large user base. Examples of such companies include Airbnb, Uber, SpaceX and many others that have raised hundreds of millions. Startup founders often wonder how much they can raise. This article aims to provide answers to your questions, specifically tailored to our local reality.
In reality, there can be unlimited rounds of investment. However, we will focus on the rounds that are feasible within the Bulgarian ecosystem, namely pre-seed, seed, Series A, and Series B. This is because the most fast-growing startup in Bulgaria has raised a Series B round.
- Pre-seed round is for companies in the idea stage, with market research, a small MVP, or some users. Globally, this round can raise up to ~$500k. In Bulgaria, the maximum is usually around ~$200k, although it is too rare. The typical range for this round is between $25k-$50k.
- Seed round is for startups that have traction, with users and revenue. Startups in this stage need funds to expand their teams and complete product development. Globally, the round can go up to $4M, while in Bulgaria, it is usually around ~$100k to $500k.
- Series A is for startups that have achieved product-market fit. These startups are experiencing month-on-month growth and generate at least $300k in annual revenue. They require funds to enter new markets, launch new product features, or scale their teams. The average size of this round worldwide is approximately $20M. In Bulgaria, very few companies have reached this stage, and local VCs typically invest no more than $3M in a startup at this stage.
- Series B is for startups that have established stability in the market, with minimal risk of failure. This round targets companies with a large user base, doubling their revenue each year, and aiming to become market leaders. It is nearly impossible for Bulgarian startups to raise such a round locally, so those that have achieved it usually attract foreign investors. The size of this round globally is around ~$100M.
Before approaching investors, there are several important things to consider:
- Seek advices from individuals who have successfully raised funds before.
- If you are in the pre-seed or seed stage, the chances of securing funding from foreign investors are minimal. It is advisable to connect with local investors.
- Ask someone to introduce you to investors as it often yields better results. Beyond pre-accelerator can be helpful in this regard, as we are familiar with all the VCs in Bulgaria, and some have invested in our portfolio companies. Feel free to reach out to us.
In conclusion, raising money is a long-term process. It is crucial to accurately assess your current stage and evaluate your startup realistically. For more information on how to do this, refer to our other articles.