India is home to over 125,000 startups and more than 110 super-successful companies called “unicorns” in 2025, making it one of the top startup hubs in the world. For new businesses, getting money to grow is a big step, and two early stages—seed funding and Series A—are super important. They’re different in what they’re for and what investors expect. This article explains seed funding and Series A in simple words, helping Indian startups understand what they need to do to get funding and grow
What Is Seed Funding?
Seed funding is the first real money a startup gets from outside investors, usually after using personal savings or help from friends and family. It’s like planting a seed to help a business idea start growing into something real.
Key Points About Seed Funding
- How Much Money: Usually between INR 40 lakhs and INR 15 crores, depending on the business. Most Indian startups raise about INR 1–3 crores.
- Who Gives the Money: People like angel investors (wealthy individuals like those in Indian Angel Network), small venture capital (VC) firms (like 100X.VC), or government programs like the Startup India Seed Fund Scheme, which gives up to INR 50 lakhs.
- What It’s For: To build a basic product (called a minimum viable product or MVP), test if people like the idea, hire a few people, and do some early marketing. For example, a startup called UltraNutri used seed money to create eco-friendly shrimp feed.
- Ownership Given Up: Investors take 10–20% of the company because the startup is new and valued low (around INR 25–50 crores). Sometimes, they use special deals called SAFE notes to decide the value later.
- Risk: It’s risky for investors because the startup is just an idea with no sales yet. They trust the founders and the idea’s potential.
Challenges at Seed Stage
- Proving the Idea: Startups need to show their idea will work, which is hard with little money.
- Finding a Team: Getting good people to join is tough when you can’t pay much yet.
- No Track Record: New startups don’t have sales or customers, so convincing investors takes a great story and plan.
What Is Series A Funding?
Series A comes after seed funding, when the startup has a working product, some customers, and maybe a bit of money coming in. It’s about making the business bigger, like adding more customers or reaching new places.
Key Points About Series A
- How Much Money: Usually INR 15–120 crores, with most Indian startups raising INR 20–50 crores.
- Who Gives the Money: Big VC firms like Sequoia Capital India or Accel Partners, and sometimes angel investors or crowdfunding platforms like LetsVenture.
- What It’s For: To grow the business, hire more people, improve the product, and get more customers. For example, Dezy, a dental care startup, raised $23 million to open more clinics.
- Ownership Given Up: Startups give up 15–25% of the company, with valuations around INR 80–400 crores, since they’ve shown some success.
- Risk: Less risky than seed funding because the startup has customers and sales, but investors want proof it can grow big.
Challenges at Series A
- Hard to Get: Only about one in three startups that get seed funding can get Series A because investors are pickier.
- Big Expectations: Investors want to see sales, lots of customers (like 1,000+), and a clear plan to make money.
- Close Checks: VCs carefully check the startup’s money, team, and plans. Problems, like those at Go Mechanic, can stop funding.
How Seed Funding and Series A Are Different
| What’s Different | Seed Funding | Series A Funding |
|---|---|---|
| Stage | Just an idea or basic product, no sales | Working product, some customers and sales |
| Money Raised | INR 40L–15Cr | INR 15–120Cr |
| Investors | Angels, small VCs, government funds | Big VCs, some angels, crowdfunding |
| Purpose | Build a product, test the idea, hire a team | Grow the business, get more customers |
| Ownership Given Up | 10–20% | 15–25% |
| Valuation | INR 25–50Cr | INR 80–400Cr |
| Risk | Very risky, unproven idea | Less risky, some proof of success |
| What Investors Look For | Idea, team, market size | Sales, customers, growth plan |
Opportunities for Indian Startups
Seed Funding Opportunities
- Government Help: The Startup India Seed Fund Scheme gives up to INR 20 lakhs as grants or INR 50 lakhs as loans for new ideas, especially in farming, biotech, or social projects.
- Angel Support: Groups like Indian Angel Network give money and advice, helping startups like Cora Health raise INR 4.6 crores.
- Low Prices: Investors can buy into startups cheaply at this stage, which is great if the startup grows big, like Knorish, which raised $5 million later.
Series A Opportunities
- Big Growth: Series A money helps startups reach new customers or places. For example, Fyllo raised $4 million to grow its farming tech.
- VC Know-How: Big investors like Sequoia bring advice and connections to help startups like Dezy grow faster.
- Path to Going Public: A good Series A can lead to more funding or even stock market listings. In early 2025, 62 Indian startups raised $2.8 billion by going public.
Challenges to Watch Out For
Seed Funding Challenges
- Risky for Investors: Since there’s no sales yet, investors take a big chance and might ask for more ownership.
- Tight Budgets: Startups struggle to build products or find customers with little money.
- Proving Yourself: New founders need to show they can make the idea work, which is tough without experience.
Series A Challenges
- Showing Results: Investors want proof of sales and lots of customers, like 1,000 or more.
- Close Checks: VCs look closely at the startup’s money and plans, and problems can stop funding.
- Giving Up More: Founders give up more ownership, which means less control over their company.
How Startups Can Get Ready
For Seed Funding
- Make a Great Pitch: Create a simple presentation showing the problem you solve, why people will buy, and your team’s skills.
- Test Your Idea: Do some research to prove people want your product. For example, Tellus Habitat tested its water-cleaning tech before asking for money.
- Use Government Programs: Apply for Startup India funds or grants like NIDHI PRAYAS to get money without giving up ownership.
- Meet Angels: Go to events like India Fund Fest to talk to angel investors.
- Use Flexible Deals: Offer SAFE notes to delay setting a company value, which can attract more investors.
For Series A Funding
- Show Success: Prove you have customers, sales (like INR 2–3 crores), and a product people love.
- Build a Team: Hire key people, like tech experts or marketers, to show you can grow.
- Be Ready for Checks: Keep your finances and legal papers clean. Hire experts like ParsBEM to help.
- Find the Right VC: Look for investors who know your industry, like 3one4 Capital for tech or India Quotient for farming.
- Use Platforms: Try sites like LetsVenture to connect with many investors at once.
Tips for Doing Well
- Pick the Right Time: Get seed funding when you have a basic product or idea, but wait for Series A until you have sales and customers.
- Choose Good Investors: Pick people who understand your business and have helped similar startups.
- Be Honest: Share real numbers and plans to build trust with investors.
- Focus on Results: For seed, talk about your idea and team; for Series A, show sales and growth.
- Don’t Overpromise: Be realistic so investors trust you.
Why India’s Startup Scene Is Great
India’s startups have lots of chances to get funding:
- Government Support: Programs like Startup India give grants and loans, especially for new fields like biotech or social projects.
- Active Investors: In 2022, VCs invested $9 billion in Indian startups, and firms like Sequoia are eager for Series A deals.
- Angel Growth: Groups like 100X.VC help startups get seed money, like Emo Energy’s $6.2 million Series A.
- Online Advantage: With 900 million internet users, startups can pitch to investors worldwide.
But it’s not easy—only about one in three startups with seed funding gets Series A because investors want strong proof of success.
Conclusion
Seed funding and Series A are big steps for Indian startups. Seed funding helps turn an idea into a real product, while Series A helps the business grow bigger. By understanding what investors want, making strong plans, and using India’s support—like government programs and angel networks—startups can get the money they need. With the right preparation and partners, Indian startups can use these funding stages to build successful businesses and shine in India’s exciting startup world.
Last Updated on Saturday, July 12, 2025 10:37 am by Chandini Naidu
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