Seed
Also known as Seed Round, Seed Funding, Seed Stage
A seed round is the first real financing round for a startup. It is often the first priced round, raised after any earlier SAFEs or convertible notes have come in. The point of the round is to get the company from early product to enough traction to raise a Series A.
In depth
Seed used to be the first money in. Now it is usually the first money in after the SAFE or note stack, though plenty of teams (especially outside the US) just price the round from the start. In economic terms a modern seed looks a lot like what a Series A looked like in the early 2010s. There is a lead, the round is priced as preferred stock, the lead often takes a board seat, and investors expect the company to be doing real revenue inside of about a year.
The instruments are not the same everywhere. Ten years ago seeds were mostly small convertible notes. In the US a lot of seeds today are either priced preferred or large post-money SAFEs that work like a priced round in practice. In Europe and most emerging markets, seeds are more often convertible notes or priced equity. The structure is the same in spirit: a lead writes the anchor check, and other investors come in alongside.
The market is also split into two. Most seed rounds cluster around the median, but the top of the market is a different game. The biggest seeds raise several times more than the median at much higher valuations. AI companies make up most of that top end and tend to price meaningfully above non-AI companies at the same stage.
Why it matters
Seed sets the dilution path for the whole company. A priced seed usually costs the founders around 20% of the company, and the lead almost always asks for a fresh option pool funded out of the pre-money. Once you add that in, founders typically walk out of their first priced round owning a bit more than half of the fully-diluted cap table. That number only goes down from there with every later round.
The bar to graduate to Series A has also moved up. Series A investors are underwriting against real revenue now, not just story. So the actual job at seed is to turn the cash you raised into enough revenue to clear that bar before the runway runs out. Most seed companies do not make it. The ones that do not either extend the round, do a bridge, or wind down.
Worked example
A team raises $4M on a priced seed at $16M pre-money, $20M post-money. The lead asks for a 10% option pool top-up included in the pre-money.
Pre-money before pool top-up: $16M
Option pool top-up: $2M (10% of $20M post)
Effective pre-money: $14M
Seed dilution: $4M / $20M = 20%
Option pool dilution: $2M / $20M = 10%
Founder dilution this round: 30% combined
If founders owned 100% before the round, they exit seed with roughly 70% on a fully diluted basis, with employees holding the 10% option pool and the seed investors holding the remaining 20%.
Frequently asked
What is a typical seed round size?
It varies a lot by sector and geography. A modern seed is usually a few million dollars at a post-money valuation in the low double-digit millions, but the top end of the market is much higher than the median. For current figures, look at recurring data reports from PitchBook, Dealroom, Carta, or your local venture association.
What milestones do I need for a seed round?
Most seed leads want a working product, some real users, a clear view of who you sell to, and a path to enough revenue to raise a Series A in the next twelve to eighteen months. Idea-stage capital lives at pre-seed. The Series A bar has gone up a lot in recent years, so what really matters at seed is whether the round buys you a credible shot at that revenue number.
How much dilution at seed?
Founders usually give up around 20% on a priced seed, plus whatever the lead takes for an option pool top-up out of the pre-money. The math is simple: round size divided by post-money for the investors, plus the pool top-up as a share of post-money. Add it all together and founders typically walk out of seed owning a bit more than half of the company on a fully-diluted basis.
Is a seed round always priced?
No. Plenty of seeds are done on post-money SAFEs or convertible notes with valuation caps, especially smaller raises or rounds in markets where SAFEs are less common. You usually only see priced preferred stock once there is a clear lead investor asking for a board seat and protective provisions. Some teams skip SAFEs entirely and price from day one.
How long between seed and Series A?
The gap has gotten noticeably longer over the past several years. The median is now somewhere around two years, with a long tail of companies that take much longer. Only a minority of seed companies ever raise a Series A. The rest extend the round, do a bridge, or wind down.