Seed funding for startups - from pitch to term sheet

Seed funding is the first significant round of institutional capital a startup raises, typically after bootstrapping or friends-and-family money. In India, it usually ranges from ₹1 crore to ₹15 crore and is used to build the product, hire the founding team, and prove product-market fit before Series A.

The typical sequence is: bootstrapping / friends-and-family, pre-seed (₹25 lakh - ₹1 crore), seed (₹1 crore - ₹15 crore), Series A (₹10 crore - ₹50 crore), Series B and beyond. Pre-seed is for building the MVP; seed is for proving traction; Series A is for scaling proven unit economics.

It depends on your burn rate and milestones. Most Indian startups raise enough for 18-24 months of runway at seed. A simple rule: divide your monthly burn by 0.03 (you want to spend less than 3% of the round per month on runway alone, with the rest going to growth).

Pre-money valuations at seed in India typically range from ₹8 crore to ₹30 crore for SaaS and tech startups, ₹5 crore to ₹15 crore for consumer and marketplace, and ₹10 crore to ₹40 crore for deep-tech and IP-driven businesses. The range is wide because it depends on traction, team, and sector comparables.

At pre-seed, 10-15% is typical. At seed, 15-25% is the market range. At pre-series A, 15-20%. The total dilution across pre-seed, seed, and Series A usually lands between 30% and 45% - plan for it, do not let it surprise you.

Investors will ask for: a pitch deck, a 3-year financial model, a cap table, incorporation certificate, founder KYC, bank statements, and any existing shareholder agreements. If there is IP involved, assignment agreements. Customer LOIs or revenue data strengthen the pitch significantly.

It varies widely and depends on investors - from a few weeks to several months. Our preparation work (deck, model, target list) usually takes about 2-3 weeks; how quickly a round closes after that is not something any advisor controls. Preparation before the first meeting is what you can control.

A term sheet is a non-binding summary of the key terms of an investment: valuation, amount, liquidation preference, board seat, pro-rata rights, and other rights. It is the first formal document an investor sends after deciding they want to invest. It is followed by definitive agreements (SHA, SPA) that are legally binding.

Equity dilution is the percentage of your company you give away when you raise funding. If you own 100% before a seed round and sell 20% to investors, your ownership drops to 80%. Subsequent rounds dilute further. Plan for dilution from the start with an ESOP pool and cap table management.

Yes. Even the most casual angel investor expects a pitch deck. It is not just a presentation - it is the document that determines whether you get a first meeting. A deck that opens doors is specific, metric-driven, and tells a story, not a feature list.

Angel investors are high-net-worth individuals investing their own money, writing smaller cheques. Seed VCs are professional funds managing pooled capital, usually writing larger cheques (amounts vary by fund and market conditions). Angels decide faster and may mentor more; seed VCs have a fund mandate, a partnership decision process, and follow-on capital for Series A.

Yes, but it is harder and the pool of investors is smaller. Pre-seed and seed rounds without revenue depend on the strength of the team, the problem size, the technology moat, and early traction metrics (users, engagement, pipeline). A working MVP with early users is far more fundable than an idea with no execution.

SAFE (Simple Agreement for Future Equity) and convertible notes are instruments used in pre-seed and seed rounds where the valuation is not yet set. They convert into equity at the next priced round (typically Series A). SAFEs are simpler and founder-friendly; convertible notes have an interest rate and a maturity date, which can create pressure if not managed.

An ESOP (Employee Stock Ownership Plan) pool is a reserve of shares set aside for future employees. Investors typically require a 10-15% ESOP pool to be created before or during the seed round. It dilutes founders and existing shareholders. If you create it after the round, it dilutes only the founders.

Sometimes. The Startup India Seed Fund Scheme (SISFS) has offered selected DPIIT-recognised startups (incorporated not more than 2 years before applying) up to ₹20 lakh as a grant and up to ₹50 lakh through convertible debentures or debt-linked instruments, via incubators - so the investment part is not automatically non-dilutive. The official portal says the window for new startup applications closed on 31 May 2026 (checked 21 Oct 2026); check seedfund.startupindia.gov.in for any reopening.

Revenue-based financing (RBF) provides capital in exchange for a percentage of monthly revenue until a cap is reached. It does not dilute equity. It suits SaaS startups with recurring revenue and is gaining traction in India through specialised RBF platforms. Typical terms: 1.5-3x cap over 12-36 months.