Funding stages, explained
In one sentence
Startups usually raise money in steps, from small early amounts to larger rounds, and each step asks for more proof that the company works.
Pre-seed is the first outside money. The team is testing whether the problem is real and building a first version. It often comes from grants, angel investors, friends or small funds.
Seed is the first proper round. The company has a product or a strong prototype and some early signs that people want it. The money goes into building the product and finding the first paying customers.
Series A comes when the company has shown real demand and needs money to grow it. Investors now look at numbers: customers, revenue, growth.
Series B and later fund scaling: new countries, bigger teams, more products.
In each round, investors usually buy new shares. The company's value before the money comes in is the pre-money valuation, and after it the post-money valuation. Because new shares are created, the founders' percentage gets smaller. This is called dilution, and it's normal: a smaller slice of a bigger company can be worth much more.
health ventures often move slower than software startups, because evidence and regulation take time. That is why grants and specialised health investors matter so much here.
Not every company needs investors. Some grow from their own sales.