Fundraising
Fundraising and equity
Every funding round changes the cap table and the rights attached to shares. This hub explains the instruments, stages, and term sheet clauses founders across Europe need to understand before they raise.
Funding round mechanics and investor terms
Funding Rounds
Startups typically raise money in stages, from pre-seed through seed, Series A, B, and beyond, with each round bringing more capital, a higher valuation, and more structured investor terms.
Seed Round
A seed round is typically a startup's first significant institutional raise, used to build an initial product and reach early traction. In Europe it is commonly structured as a convertible loan note or a priced equity round with preferred shares.
Series A
Series A is usually a startup's first large institutional round, led by a venture capital fund, priced with preferred shares, and accompanied by a full set of investor protections such as board seats and liquidation preference.
SAFE
A SAFE (Simple Agreement for Future Equity) is a US-originated instrument that converts to equity at a future round without accruing interest or having a maturity date. Many European jurisdictions use convertible loan notes or advance subscription agreements instead, since SAFEs are not standard company law instruments outside the US.
Convertible Note
A convertible note is a short-term loan that converts into equity at a future funding round, usually at a discount to that round's price. It is the most common early-stage instrument across UK, German, and Dutch startup markets.
Term Sheet
A term sheet is a non-binding document setting out the key economic and control terms of a funding round before lawyers draft the full legal documents. Understanding each clause before signing is essential, since most of the term sheet becomes binding once definitive documents are signed.
Liquidation Preference
A liquidation preference gives preferred shareholders the right to be paid back before ordinary shareholders when a company is sold or wound up. Most European venture deals use a 1x non-participating preference, which is considered founder-friendly compared to participating structures.
Ownership After Funding
Every funding round changes who owns what percentage of a company. Understanding pre-money versus post-money math, pool top-ups, and cumulative dilution is essential for founders and employees tracking their real stake.
Fundraising sits next to cap tables and dilution
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