Seed Funding: How Much to Raise and What It Costs You
Seed funding in plain words: what a seed round is for, how much to raise from your runway, how much of your company you give up, and SAFEs vs priced rounds.
Key takeaways
- Seed funding is the first real investment in a startup. It pays for finding a repeatable way to grow.
- Work out how much to raise from your plan: monthly burn times 18 to 24 months, plus a buffer. Not from what other startups raised.
- A typical seed round sells about a fifth of the company. Carta’s 2025 data put the median at $4 million raised on a $20 million valuation.
- Most early rounds use a SAFE, which turns into shares later. A priced round sets a price and issues shares straight away.
- Raise when you can show progress, such as users, revenue or pre-sales, and you know exactly what the money will do.
Seed funding is the first proper investment a startup raises, usually from angel investors, seed funds or accelerators, in exchange for a share of the company. It pays for the stretch between an early product and a business that grows in a repeatable way. This guide explains what seed funding is for, how much to raise, what it costs you in ownership, how SAFEs and priced rounds work, and when you're ready to ask.
What seed funding is for
Seed money should buy proof. It pays for the people and experiments you need to show that your startup can grow: repeatable sales, customers who stay, and revenue that rises month after month.
It usually comes after pre-seed money (your own savings, friends and family, or an accelerator) and before a Series A from venture capital funds. Some startups raise only a seed round and grow from revenue after that. Our startup funding guide shows how the stages fit together.
A seed round isn't a reward for having an idea. Investors fund a plan: what you'll achieve with the money, and by when.
How much seed funding to raise
Work it out from your plan, not from what other startups raised:
- Monthly costs after the raise: salaries, tools, marketing, and an office if you need one.
- Minus the revenue you can rely on, month by month.
- Times the months to your next milestone, usually 18 to 24.
- Plus a buffer of 20 to 25% for delays and surprises.
| Line | Example |
|---|---|
| Monthly costs after raising | $40,000 |
| Revenue you can rely on | $5,000 |
| Monthly burn | $35,000 |
| Months of runway | 20 |
| Cash needed | $700,000 |
| Buffer at 20% | $140,000 |
| Round to raise | about $850,000 |
Why 18 to 24 months? Because the next raise usually takes longer than planned. Carta's State of Seed report found a median of about two years between a seed round and a Series A.
Raising too much has costs too: you give up more of the company, and the next round has to justify a higher valuation. Our free seed funding calculator works out the amount from your own numbers, including revenue growth.
How much of your company seed funding costs
The share you give up is simple to work out:
Share sold = amount raised ÷ valuation after the round (the post-money valuation)
If you raise $850,000 at a $5 million post-money valuation, investors own 17%.
Say two founders own half each. After that round, each owns 41.5%. Their slices are smaller, but the company now has $850,000 to grow with. Investors often also ask for an option pool for future employees, commonly 10 to 15%, and that comes out of the founders' share too.
For a benchmark, Carta's 2025 data on mostly US startups put the median seed round at $4 million on a $20 million post-money valuation: about 20% of the company. Many seed rounds sell between 15% and 25%. Selling much more than that early can make later rounds harder.
SAFE or priced round?
Most early rounds use one of two instruments:
| SAFE | Priced round | |
|---|---|---|
| What investors get now | A right to shares later | Shares straight away |
| Price | A valuation cap (a maximum price) instead of a fixed one | A fixed price per share |
| Speed and legal cost | Fast and cheap, with standard documents | Slower, with more legal work |
| Common for | Pre-seed and many seed rounds | Larger seed rounds and Series A |
A SAFE isn't a loan. There's no interest and no repayment date. But it's still selling part of your company, so track every SAFE as if it were shares already.
In India, early rounds are often done with compulsorily convertible preference shares (CCPS) rather than US-style SAFEs. A startup lawyer can tell you what fits your round.
Where seed funding comes from
- Angel investors: individuals investing their own money, often founders themselves.
- Seed funds: venture funds that specialise in early rounds.
- Accelerators: Y Combinator, for example, invests $500,000 in every company it accepts.
- Angel networks and platforms: groups that review startups and invest together.
- Government-backed funds: in India, the Fund of Funds invests through venture funds that back startups. See our Startup India guide.
Are you ready to raise seed funding?
You're ready when you can tick most of these:
- You can explain the problem, and who has it, in one sentence.
- You have proof: users, revenue, pre-sales or strong engagement.
- You know your monthly burn and your runway today.
- You know what the money will achieve, in numbers: "reach $50,000 in monthly revenue" or "hire two engineers and launch in two new cities".
- You have simple projections for the next 18 to 24 months. See startup financial projections.
- You've considered not raising at all. See bootstrapping vs venture capital.
If you can't tick them yet, that's fine. Keep costs low, sell before you build, and let customers fund the next step. You'll raise on better terms later, with proof in hand.
Frequently asked questions
What is seed funding?
Seed funding is the first significant investment in a startup, usually from angel investors, seed funds or accelerators, in exchange for shares or a SAFE. It pays for the team and experiments needed to find a repeatable way to grow, before a larger Series A round.
How much seed funding should I raise?
Enough for 18 to 24 months. Take your monthly costs after raising, subtract the revenue you can rely on, multiply by the months you need, and add a 20 to 25% buffer. Raise for a clear milestone, not a round number you’ve heard elsewhere.
How much equity do you give up in a seed round?
Often between 15% and 25%. Carta’s 2025 data on mostly US startups put the median seed round at $4 million on a $20 million post-money valuation, which is 20%. Your share sold is the amount raised divided by the post-money valuation.
What is the difference between a SAFE and a priced round?
A SAFE gives an investor the right to shares later, usually at your next priced round, with a valuation cap as the maximum price. It is quick and cheap. A priced round sets a price per share and issues shares now, with more legal work and investor rights.
Can I raise seed funding with no revenue?
Yes. Many seed rounds happen before revenue, especially with a strong team or fast user growth. But proof helps you raise on better terms: pre-sales, pilots, paying users or a waitlist that converts. The more you can show, the less of your company you usually give up.