Startup Funding Stages Glossary: Seed to Series D and AIF Categories
Startup funding rounds are named by stage, and the terminology can be confusing for founders and readers new to venture finance. This glossary defines the funding stages and fund structures most commonly referenced in Global Business Line’s funding coverage, including the tracker.
Bootstrapping
Funding a company using founders’ personal savings, early revenue, or friends-and-family capital, without institutional investors. Common in the earliest phase before a company has a product or traction to raise a formal round.
Seed Round
The first formal equity round, typically used to build an initial product and reach early traction. In India, seed rounds in 2026 commonly range from roughly ₹1 crore to ₹15-20 crore (about $120,000 to $2.4 million), though amounts vary widely by sector.
Series A
Follows seed funding once a startup has demonstrated product-market fit and a repeatable go-to-market motion. Series A rounds fund scaling of the team, product, and customer acquisition.
Series B
Raised once a company has proven its business model and is scaling revenue, typically used to expand into new markets, segments, or geographies.
Series C
A later-stage round for companies with an established market position, often used to fund acquisitions, international expansion, or preparation for an eventual IPO.
Series D and beyond
Additional growth rounds raised when a company needs more capital before an IPO or acquisition, or when it has not yet reached profitability but continues to scale. Not every company raises a Series D; it typically signals either continued high growth or a longer runway to liquidity.
Bridge Round
A smaller, shorter-term round raised between larger, named rounds (for example, between Series A and Series B) to extend a company’s runway until conditions are right for the next full round. Often structured as convertible notes or SAFEs rather than priced equity.
Mezzanine Financing
A hybrid of debt and equity financing, typically used by more mature, pre-IPO companies. It ranks below senior debt but above equity in a liquidation, and often includes warrants or conversion rights that give the lender an equity stake if the company is acquired or lists publicly.
Alternative Investment Fund (AIF)
A privately pooled investment vehicle regulated in India by the Securities and Exchange Board of India (SEBI), used by venture capital funds, private equity funds, and hedge funds. AIFs are divided into three categories based on the type of investment strategy.
AIF Category I
Funds that invest in start-ups, early-stage ventures, social ventures, SMEs, infrastructure, or other sectors the government or regulators consider socially or economically desirable, including venture capital funds and angel funds. These often qualify for regulatory incentives.
AIF Category II
Funds that do not fall under Category I or III and do not use leverage other than to meet day-to-day operational requirements, such as private equity funds and debt funds. This is the largest AIF category by capital raised in India.
AIF Category III
Funds that employ diverse or complex trading strategies, including leverage through investment in listed or unlisted derivatives, such as hedge funds. Category III AIFs face closer regulatory scrutiny given their use of leverage.