Expert Guide Series

What Funding Stage Matches My App's Development Phase?

A travel booking app had spent eighteen months building what they thought was launch-ready software, with a clean interface for comparing flight prices and a booking system that worked smoothly in testing. They'd invested about £85k of their own money to reach this point, and now they were shopping for investors to help them scale. The only problem was that every conversation with potential backers ended with the same confused response... why hadn't they launched yet with something simpler, and why were they asking for series A money when they didn't have any users to show retention numbers or booking patterns?

Most founders build too much before raising their first penny, whilst others try to raise millions before they've proven anything works in the real world

Getting the timing wrong between what you've built and what stage of funding you're chasing will waste months of your life, I've watched it happen probably thirty times now. The travel app team eventually had to completely rethink their approach, strip back to a basic MVP focused on just one route between London and Edinburgh, and start again with a pre-seed round instead. They lost nearly a year in the process.

Understanding the Basics of Startup Funding

The way money flows into startups follows a fairly predictable pattern, though the amounts and timelines vary wildly depending on your industry and location. Each funding stage expects to see different things from your app, different numbers around users and revenue, and different levels of risk that they're willing to accept in exchange for their cash. Pre-seed funding typically ranges from £10k to £250k and comes from your own pocket, friends and family, or small angel investors who are comfortable with very early stage ideas. Seed funding sits between £250k and £2 million usually, and comes from angel investors or early stage venture capital firms who want to see some proof that your idea works with real people. Series A is where things get more serious, with rounds between £2 million and £15 million from VC firms who need to see proper traction and a clear path to making money at scale. Here's roughly what investors expect at each stage:

Funding Stage	Typical Amount	What They Want to See
Pre-Seed	£10k-£250k	Working prototype, small test group, basic validation
Seed	£250k-£2m	Launched product, early users, some engagement data
Series A	£2m-£15m	Strong user growth, clear business model, retention proof
Series B	£15m-£50m	Proven revenue model, large user base, expansion ready

The numbers overlap quite a bit in reality, and some companies raise massive seed rounds that look more like series A money, whilst others bootstrap right through to profitability without raising anything at all.

Pre-Seed and MVP Development

Your MVP should solve one specific problem for one specific group of people, and it should do that job well enough that people actually use it more than once. I've seen too many founders build massive apps with fifteen features before they've tested whether anyone actually wants the core thing they're offering. At this stage you're probably spending between £15k and £60k on development if you're outsourcing, or investing three to six months of your own time if you're building it yourself. The goal isn't to create something beautiful or complete, the goal is to test your main assumption about what people need and whether your solution actually helps them. Understanding why cheap development often costs more in the long run can save you from expensive mistakes during this crucial phase. A healthcare app I worked with in their pre-seed phase wanted to build a complete patient record system, appointment booking, prescription management, and symptom checker all in one go. We convinced them to start with just the appointment booking feature for one specific type of consultation that was hard to access through normal channels. Built it in six weeks for about twenty-two grand. They got 200 users in the first month through a partnership with a single clinic, and the booking data from those early users completely changed their thinking about what features to build next.

Track just three numbers in your MVP phase: how many people complete your main action, how many come back within seven days, and what percentage recommend you to someone else. Everything else is noise at this point.

Your pre-seed pitch deck needs to show that you understand the problem deeply, that you've talked to potential users (not just sent surveys but actually had conversations with at least twenty people), and that you have a plan to build something testable for a reasonable amount of money. Before you even think about pitching investors, consider whether your app idea is actually worth funding in the first place. Investors at this stage are backing you as a person more than your app, so your own background and why you're the right person to solve this problem matters more than detailed financial projections.

Build one feature properly instead of five features badly
Launch with a small group you can talk to directly
Plan for eight to twelve months of runway with the money you raise
Expect to pivot at least once based on what you learn

Seed Funding and Your First Launch

You're ready for seed funding when you've launched something that real people use without you having to beg them, and you can show that at least some percentage of those users come back regularly. Not perfect retention numbers, not hockey stick growth, just proof that when people try your app they don't immediately delete it and that your core idea has some validity. The apps that get funded at seed stage usually have between 1,000 and 50,000 users depending on the market size, with week-one retention somewhere between fifteen and forty percent. They're spending almost nothing on user acquisition at this point, growing mainly through word of mouth, PR, or very small targeted campaigns that help them understand what messaging works. Smart founders start building an email list before launch to give themselves a better foundation for early user growth. A fintech app we built raised £480k at seed after running for four months with about 3,000 users who were using the app to split bills with housemates. Their retention was decent at around thirty-two percent after seven days, but what really sold investors was that users were processing real money through the app and the transaction data showed people were using it for regular monthly payments, not just one-off splits. That pattern suggested habit formation, which is what seed investors want to see. Your seed round should fund twelve to eighteen months of operation, with the money going mainly towards:

Hiring your first couple of employees or contractors
Starting to spend properly on user acquisition to test channels
Building out the features that your early users keep asking for
Improving stability and performance as usage grows

The biggest mistake at this stage is raising too much money at too high a valuation, which makes your series A round much harder because you need to show massive growth to justify a step up in value. I've watched companies raise million-pound seed rounds at £8m valuations, then struggle to raise series A eighteen months later when they're valued at £7m because their growth didn't match the expectations that early valuation set.

Series A and Scaling Your User Base

Series A is about taking something that works on a small scale and proving you can make it work on a large scale without everything breaking. You need proper revenue (or a very clear path to revenue), strong unit economics that show each user is worth more to you than they cost to acquire, and retention numbers that prove people genuinely need what you've built.

The companies that successfully raise series A funding typically have at least 100,000 active users, monthly growth rates above ten percent, and can show a repeatable process for acquiring customers profitably

I worked with an education app that was perfect for series A when they came to us for help scaling their infrastructure. They had 180,000 students using the app weekly to practice maths problems, retention after thirty days was sitting at forty-eight percent, and they were acquiring users through school partnerships for about £3.20 per student whilst each student was worth roughly £24 in lifetime value based on their subscription model. Those numbers told a clear story that more money would help them grow faster without changing the fundamental model. Your series A should raise enough to fund eighteen to thirty-six months of operation, giving you time to hit the metrics needed for series B without rushing. Most rounds sit between £2 million and £8 million for UK apps, though US-based apps often raise more at similar stages. By this point, you should also be thinking carefully about which platforms will support your scaling plans most effectively.

What Series A Investors Want

They want to see that you can acquire users through repeatable, scalable channels rather than just getting lucky with press coverage or viral growth. They want evidence that you understand your costs and can predict future performance with some accuracy. They want to believe you can become a £100m business or larger, which means your market needs to be big enough to support that kind of growth.

When to Wait

If your monthly active users are declining or flat, wait. If your unit economics don't work and you can't explain exactly what will fix them, wait. Series A investors have seen enough apps to spot problems early, and trying to raise when you're not ready just burns relationships you might need later.

Series B and Market Expansion

Series B money funds expansion into new markets, new user segments, or new product lines that leverage your existing user base. You've proven the core business works, now you're proving you can grow it much larger without losing what made it successful in the first place. At this point you probably have somewhere between 500,000 and several million users, you're generating meaningful revenue (usually at least a couple of million pounds annually), and you've built a team of twenty to fifty people who know how to execute without you personally doing everything. An e-commerce app I've worked with raised £12m at series B after proving their model in the UK with fashion resale for women aged 25-40. The series B money funded expansion into menswear, childrenswear, and launching in France and Germany. They had the infrastructure built, the brand established, and the supply chain working, so adding new categories and markets was much cheaper than building the original platform had been. Understanding realistic paths to app monetisation becomes crucial at this stage when you're expanding into new revenue streams. Your series B pitch focuses more on market size and competitive positioning than earlier rounds. Investors want to understand why you'll win your market rather than just survive in it, and they want to see that you've built something defensible that competitors can't easily copy.

Focus Area	Series A	Series B
Primary Goal	Prove the model works	Prove it scales to new markets
User Base	100k-500k	500k-5m+
Team Size	10-25 people	25-100 people
Revenue Run Rate	£500k-£3m	£3m-£20m+

The gap between series A and B usually takes eighteen to thirty-six months, and a lot of companies die in this period because they scaled too fast and broke their business model, or scaled too slowly and ran out of money before hitting the metrics needed for the next round.

Later Stage Funding and Maturity

Series C and beyond are about market dominance, profitability, or preparing for an exit through acquisition or public listing. You're past the point of proving your business works, now you're optimising operations, acquiring competitors, or expanding internationally to capture as much market share as possible before growth naturally slows. The apps that reach this stage are handling millions of users, generating tens of millions in revenue, and have built substantial teams that operate more like traditional companies than startups. Your technology challenges shift from building new features to maintaining stability at scale, handling security and compliance properly, and managing technical debt from those early days when you were moving fast. At this level, you need to be asking your development teams the right security questions to protect your substantial user base. I don't work with many apps at this stage because they've usually built internal teams that handle most development work, but the ones I've consulted with on specific problems are dealing with questions like how to maintain app performance when you're processing millions of transactions daily, or how to keep your codebase manageable when you've got forty developers all working on the same product.

Start thinking about your exit strategy before your series B, even if you plan to keep building for years. Understanding whether you're building towards an IPO, acquisition, or long-term independent operation changes how you make decisions about growth speed and profitability timing.

The money at these stages can reach hundreds of millions, and the investors are private equity firms, hedge funds, or large VC firms with billion-pound funds. They care much more about financial performance and market position than product details, and your conversations with them feel more like talking to business analysts than talking to people who love technology.

Common Mistakes When Timing Funding Rounds

The most expensive mistake is raising money too early before you know what you're building. You give away equity at a low valuation, then spend the money figuring out that your initial idea doesn't work and you need to pivot. Now you've got investors expecting progress on something you're no longer building, and you've diluted your ownership in a company that's essentially starting over. Raising too late is less common but still damaging. You bootstrap for so long that competitors with funding overtake you, or you run out of money right when you're starting to see traction and have to raise in a panic at whatever terms you can get. I've seen founders turn down reasonable offers at £3m valuations, then struggle for six months and eventually accept £1.8m valuations because they were weeks from running out of cash. Raising too much money too fast creates expectations you can't meet. If you raise a massive round, investors expect massive growth, and anything less than that makes your next round harder even if you're doing well by normal standards. A company that raises £5m at seed and grows to £2m in annual revenue is disappointing, whilst a company that raises £400k and reaches £2m in revenue is a success story, even though they reached the same place. Focusing on funding rounds instead of building something people want is the trap that catches first-time founders. They spend months perfecting pitch decks and taking meetings with investors when they should be talking to users and improving their product. Funding is fuel for growth, not validation that your idea is good. If you're struggling with this balance, learning how to build an MVP that attracts investors can help you focus on the right things at the right time. Learned that the hard way early in my career. Not understanding what metrics matter at each stage wastes everyone's time. Pre-seed investors don't care about your five-year financial projections, and series B investors don't want to hear about your vision without numbers to back it up. Match what you show to what matters at that stage.

Conclusion

The relationship between funding stages and development phases isn't rigid or fixed, and plenty of successful apps have followed completely different paths to the ones described here. Some bootstrap to profitability without raising anything, others raise massive rounds at every stage and prioritise growth speed over efficiency. What matters is matching your funding needs to your actual business situation rather than chasing money because it feels like the next step or because competitors are raising rounds. Build something people want first, prove it works with a small group, then raise money to scale what's working rather than to figure out what to build. The apps that get this sequence right have a much easier time at every subsequent stage, whilst the ones that get it wrong spend years trying to course correct. Your development phase should drive your funding decisions, not the other way around. If you're still testing your core idea, you're in pre-seed territory regardless of how polished your app looks. If you've got strong retention and repeatable growth, you're ready for series A even if you think you need more time. Let the data about what's working guide when you raise and how much you ask for, and you'll save yourself months of wasted effort pitching to investors who aren't right for your stage.

If you're working through these funding decisions with your own app project and want to talk through where you are and what makes sense for your next stage, get in touch with us and we can walk through your specific situation.

Frequently Asked Questions

You're ready for seed when you've launched something that real people use without you having to convince them, and you can show that at least some percentage come back regularly. If you're still testing whether your core idea works or you have fewer than 1,000 users, you're probably still in pre-seed territory regardless of how polished your app looks.

Most successful Series A companies have at least 100,000 active users with monthly growth rates above ten percent and strong retention numbers. More importantly, you need to show you can acquire users through repeatable, scalable channels and that your unit economics work - each user should be worth more to you than they cost to acquire.

Build something people want first, then raise money to scale what's working rather than to figure out what to build. I've seen too many founders raise money too early before they know what they're building, then waste it figuring out their initial idea doesn't work and they need to pivot.

This varies widely, but typically pre-seed rounds take 10-20%, seed rounds 15-25%, and Series A rounds 20-30% depending on your valuation and the amount raised. The key is raising at the right time when you can command a fair valuation rather than accepting whatever terms you can get in a panic.

They want to see user retention (usually 30%+ after seven days), clear unit economics showing profitable customer acquisition, and monthly growth rates consistently above 10%. Your five-year projections matter much less than proving you understand your current costs and can predict near-term performance accurately.

Pre-seed should fund 8-12 months, seed rounds 12-18 months, and Series A should give you 18-36 months of runway. Start your next fundraising process 6-9 months before you run out of money, as raising can take 3-6 months and you don't want to negotiate from a position of desperation.

Raising too much money too fast creates expectations you might not meet, making your next round harder even if you're doing well. A company that raises £400k and reaches £2m in revenue is a success story, whilst one that raises £5m and reaches the same £2m is disappointing to investors.

Pre-seed money should go towards building and testing your MVP with real users. Seed funding should focus on hiring your first employees, testing user acquisition channels, and building features early users request. Series A money funds scaling what's working - expanding your team, increasing marketing spend, and improving infrastructure to handle growth.