What’s the difference between seed funding and Series A funding?

seed funding singapore

In Singapore and most of Asia, investors tend to be a slightly more conservative bunch than their Silicon Valley counterparts. For avid readers of Tech Crunch and other forms of startup porn, it’s easy to get the impression that raising a multiple-million dollar round involves nothing more than a pitch deck, a full-stack developer and a CEO.

A new wave of venture capitalists in the U.S. have even taken to investing up to US$500,000 in what has become known as the “pre-seed” round, which involves investing in startups at the idea stage, before there’s any proof of concept.

Sadly, while money is abundant in Singapore and the rest of Asia, this doesn’t seem to have caught on with the professional investors in this region (or at least not in the sums described).

But I digress…

Sometimes, startup financing terminology can get a little confusing so let’s clarify what investors are talking about when they refer to seed, Series A or Series B financing.

 

 

Seed Funding

In Singapore, the term “seed funding” seems to be a pretty broad one, and can even encompass what was termed “pre-seed funding” above. Investors in Singapore seem to have different interpretations of what it means. In general, it’s usually the initial capital required to get the business started.

While some investors will invest in a startup pre-revenue as long as there’s some sort of prototype or service to demonstrate, professional investors in Singapore tend to be quite selective when it comes to seed funding.

In Singapore, seed funding tends to range from S$50,000 to S$500,000 and investors tend to insist, at a minimum, on a strong team and some form of traction, be it demonstrable revenue or user acquisition. At this stage, investments range from being in the form of straight-up equity to convertible notes or SAFEs.

Seed funding helps startups to grow much faster than they could if they were bootstrapping. Money can help refine a fast-growing product, increase marketing reach quickly and expand into other markets. In many cases, investors and startup founders alike are hoping that the seed investment provides the necessary runway for the startup to do well enough to attract…

Series A Funding

This round of funding is usually the second financing benchmark for most Singapore startups. The Series A round usually involves a more significant amount of money. Unlike the U.S, the Series A round in Singapore tends to range from around S$1,000,000 to S$1,500,000. That’s not to say that there aren’t larger Series A rounds in Singapore (Honestbee received US$15,000,000 in funding) but these startups tend to be the exception rather than the rule.

Usually investments at this stage come from venture capital funds but can involve private equity funds as well. Depending on the startup in question, there’ll be a lead investor who takes the largest stake followed by other investors taking smaller slices of the pie.

Usually, startups that reach this stage of funding have visibly demonstrated high growth potential, whether in acquiring customers or users or in actually making money.

What about the rest of the alphabet? Series B, Series C and beyond

Each new round of funding after the Series A round is referred to by the next letter of the alphabet. So if the startup raises a second round of funding after Series A, it’ll be called the Series B round, and if it gets a round of funding after Series B, it’ll be called the Series C round.

Generally, in Singapore, many startups don’t usually raise beyond Series B funding. In fact, many startups don’t even go beyond Series A before being acquired, going bust or slowly treading water.