Broadly, these terms refer to the different stages of equity funding that a Startup receives from investors in exchange for partial ownership in the startup.
Pre-Seed/ Seed Stage: The term Seed suggests that this is a very early investment, meant to support the business until it is ready for further investments or is cash flow generating on its own. Seed money normally comes from own sources, friends and family and early stage VC funding.
Startups in this phase of life are riskiest for an investor as the business model remains unproven; hence qualitative signals such as background and experience of the founders are typically more important factors to investors.
Pre-Series A/ Series A Funding: Once a startup has developed a track record in form of consistent revenue, user base or another similar metrics and wants to grow its business more rapidly the startup may opt for Series A funding. Funds raised typically are used to refine the product offerings, hire more staff, IT infrastructure and to optimize business models.
This round has traditionally been the first round where institutional investors invest in startups and is comparatively less riskier than Seed stage investing. The business model, growth strategy, exit opportunity for investors and scalability take a precedence in these rounds in evaluating the startup. Typically, pre-seed investors start taking some of their money off the table post a successful Series A round.
Series B/Series C funding: these happen when the Startup has proven themselves capable of executing on their business plans, has demonstrated the ability to handle growth pangs and now requires funding for further growth.
This is typically a stage also where the consolidation of the existing Capital Table starts happening, with exits of earliest investors.
Later stage funding/Pre-IPO rounds: As the startup has proven itself and become an established player in its industry, later stage investors come on board as the company solidifies its position and looks to scale even greater heights.