Startup growth stages, how to navigate from pre-seed to exit

As a startup founder in the UK, understanding your startup’s growth stage and how to get investors and funding is essential. It gives you access to the capital you need to develop your product, build a strong team, enhance your business offering, and scale into new markets.

In this guide, we’ll break down the different startup growth stages, what each one entails, the key milestones to aim for, and the types of investors or funding best suited to each phase.

And while you are here, make sure to check out the Wise Business account, an ideal and powerful financial solution for your startup to manage its international finances smoothly, receive global payments, and pay international suppliers or employees without the usual hassle.

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Understanding startup growth stages: an overview

Every startup usually starts with a brilliant idea. The startup typically goes through various stages of growth, starting from the ideation stage and proceeding to funding and eventual exit.
Funding provides the stability and support needed to build businesses that last. But how do you know which type of investors to approach or what kind of funding to pursue? First, you need to understand which stage of growth your startup is currently in.

What are the growth stages of a startup?

Startup growth stages outline the various developmental stages a startup undergoes. The journey typically begins at the pre-seed stage, where the initial idea for the product is conceived, and continues through to the seed stage and then to the exit stage.

These stages can be broken down into 5 phases, and each phase requires a unique approach and strategic planning. The section below will walk you through each phase and everything you need to know about it.

Why understanding startup growth stages is crucial for success?

Whether you're a new founder or preparing to raise your next round of funding, understanding the different stages of startup growth is essential to your company’s success.

Below are the main reasons why understanding your startup’s growth stages is so important:

• Focus on your primary objective for each stage: For example, an early-stage startup in the pre-seed phase focuses on market research and building a prototype. In contrast, a venture-funded startup’s primary goal is to scale and expand its operations.
• Understand when to scale: Scaling prematurely can lead to spending huge amounts on customer acquisition without nailing your product-market fit. By understanding each startup's growth stages, you can identify the milestones you need to achieve before considering scaling.
• Know the type of investors and funding to pursue: The investors interested in pre-seed startups are often very different from those you’ll approach when raising a Series B round. As a founder, it's essential to identify your ideal investors at each stage of your startup's lifecycle.

Stage 1: Pre-seed stage (ideation stage)

This is the foundational stage of a startup, where the founder has an idea they want to develop and believes it has the potential to grow into a viable business.

At this stage, it’s important to clearly define the problem your product aims to solve and outline your business hypotheses. You should also identify your business value propositions and conduct thorough market research to confirm that there is real demand for your product or service.

Pursuing an idea that no one needs is a sure way to fail. This is backed by a study from CB Insights, showing that over one-third, or 35%, of startups fail because there is no market need for their product¹. You can avoid this by conducting proper market research and having a well-tested minimum viable product (MVP). When researching, ensure you check for existing products with the same offering, direct and indirect competitors, and what differentiates your product.

The stage often involves bootstrapping. You’ll use your resources to interview potential customers, understand their needs, and create a prototype. If you are working on a product that requires extensive research and development, you may need to raise funding at this stage.

Characteristics of the pre-seed stage

Below are some of the major attributes of startups in this stage:

• Business hypothesis validation
• Very small team (around 1-4 people)
• User feedback and refine the value proposition
• A make-shift business model highlighting your plan for customer acquisition, retention, and revenue growth potential

Key activities and milestones

For businesses in this stage, here are some of the milestones they need to hit:

• Set up a company and incorporate your business.
• Develop a pitch deck and prepare anelevator pitch
• Conduct in-depth market research and customer research to gather valuable feedback.
• Develop a product prototype
• Secure pre-seed funding from early-stage investors, including friends and family, angel investors, crowdfunding platforms, and more
• Apply for accelerators and incubators

Challenges

Here are some likely challenges pre-seed stage businesses could run into:

• Not conducting enough research before moving to the next stage
• Not seeking investments on time
• Establishing credibility and gaining trust
• Working with limited resources and budget constraints
• Waiting until later to handle documentation, registrations, and legal issues

Stage 2: Seed Stage

In the seed stage, you’ll validate the idea that the founders outlined in the pre-seed stage. Here, you should already have a minimum viable product (MVP) that you are developing into a product ready for market launch.

The seed stage also involves testing your MVP in different markets and ensuring its product-market fit. Your product has a product-market fit when you can prove that it satisfies a need for a specific audience and that users are willing to pay and consistently use it. To validate product-market fit, begin by testing your product with early customers, collecting their feedback, and then refining your product accordingly.

It’s also at this stage that your early-stage startup will secure its initial capital, commonly referred to as seed funding or seed capital. This funding usually comes from investors who are willing to take high risks on early-stage startups and, in return, get potential high returns.

Investors in this stage typically include friends and family, angel investors, venture capital firms, startup accelerators and incubators, and crowdfunding or fundraising. These investors typically receive convertible securities or equity in exchange for their investments, thereby gaining a share of ownership in your company.

Characteristics

Below are some of the characteristics of companies in the seed stage:

• Focused on product development
• Founders are Product Managers
• A small team of 2-10 people
• Funding is used to grow and scale the product
• Revenue growth and signs of early traction
• A detailed plan highlighting what the funds acquired will be used for

Key activities and milestones

Founders at the seed stage are supposed to focus on:

• Refining your pitch deck
• Developing a minimum viable product (MVP)
• Validating the product-market fit
• Hiring people for key roles and scaling the team
• Finding investors such as family and friends, angel investors, and venture capital.
• Funding is used to gain early traction and start selling
• Refining operational processes

Challenges

Below are some of the major challenges startups in this stage are likely to run into:

• Struggling to secure funding or attract investors.
• Not clearly defining your value proposition and what problem your business is solving
• Finding the right people to hire
• Achieving product-market fit as quickly as possible
• Efficiently managing their burn rate to ensure they don’t run out of seed capital

Stage 3: Series A stage

This is the first round after the seed stage, which typically occurs after a startup has demonstrated market viability and achieved early traction during the seed stage.
The funding at this stage can take a startup to the next level by helping it expand operations, scale revenue, acquire more customers, and hire more team members. Series A stage usually involves investors such as venture capitalists, angel investors, and other financial firms.
Just like in the seed stage, funding here operates on an equity-based basis. In other words, a startup secures capital from investors in exchange for selling them shares in the company.

Characteristics of the Series A Stage

Here are some of the characteristics of companies in this stage:

• Fast growth and traction
• Investing in technology and resources to support scaling
• This is usually a significant capital ranging from £2 million to £10 million
• Funding is used to accelerate expansion and solidify their market position.
• High product usage and low churn rate.
• Compliance with regulatory standards such as GDPR for data protection
• Product refinement and increasing user base.

Key activities and milestones

A company in the series A stage must have:

• A solid and data-backed pitch deck and growth strategy plan
• Demonstrate impressive growth metrics and year-on-year growth
• A scalable business model
• A clear marketing roadmap for scaling beyond initial traction
• A well-detailed documentation of your finances and legal documents

Challenges

Companies in the Series A stage are more likely to run into these challenges:

• Building a strong and dedicated team
• Developing a sustainable and scalable business system
• Navigating high expectations from investors
• Pressure to scale and expand rapidly

💡 Learn more about series A funding

Stage 4: Series B and Series C stage (growth stage)

Startups at this stage are usually more established and often focus on accelerated growth. This stage is also referred to as the growth stage.
Growth for businesses in this stage could be to:

• Expand to new verticals
• Scale operations
• Prepare for acquisitions
• Position themselves for an initial public offering (IPO).

Funding in the series is a late-stage financing round, typically involving substantial amounts of capital. Series B funding is typically for taking a business past the development phase and expanding its market reach. Series C funding helps companies to achieve market expansion, acquire competitors, develop new products, and prepare for IPO or acquisition.

Investors in the Series B and Series C stages include institutional investors such as hedge funds, large venture capital firms, and private equity firms.

Characteristics of the Series B and Series C stages

• Companies in this stage are more established and have demonstrated sustained growth
• Startups here are looking to scale operations and capture new markets
• Exploring new revenue channels
• A well-structured leadership team
• A detailed roadmap for scaling beyond initial traction

Key activities and milestones

Startups at the Series B and Series C stages should have:

• Proven streams of income
• A clear market differentiator
• A reduced burn rate and a strong financial management system
• Customer retention and lifetime value

Challenges

Some of the common challenges that startups at this stage encounter include:

• Sustaining growth at scale
• Not having a strong leadership team
• Minimising burn rate
• Staying compliant with data protection and financial regulations

💡 See more about series B funding

Stage 5: Expansion and Maturity Stage

At this stage, your startup is ready to expand internationally, to countries where there’s demand for your product and services. Businesses in the expansion and maturity stage are also looking to expand and diversify their offering to reach new markets.

Characteristics

Below are some of the characteristics of startups in the expansion and maturity stage:

• Managing cashflow while heavily investing in expansion
• Diversifying into new products and services to expand your offerings
• Ready to expand to new markets

Key activities and milestones

For startups in the expansion and maturity stage, below are some of the key milestones you need to know:

• Extensive market research to understand trends, market demands, and customer behavior
• Tailor your products/services to fit the demands of the market
• Build a solid and highly efficient local team
• Customise your go-to-market strategy to fit the new market you are entering

Challenges

For startups in the expansion and maturity stage, below are some common roadblocks you should look out for:

• It’s capital-intensive
• Requires you to adapt your products and services for new markets
• You need to ensure you comply with local laws and regulations
• Understanding language barriers and cultural differences
• Managing multiple currencies
• Optimising your business operational efficiency
• Increasing your profit margins

Note: For startups expanding to international markets, using a platform like Wise Business makes it easy to receive funding from investors in multiple currencies. You can also use it to pay employees, suppliers, and contractors in their local currencies. Receiving money features are available with Wise Business Advanced, for a one time set up fee of £50.

💡 You may also like our international expansion guide

Stage 6: Exit/Decline Stage (Exit)

At this stage, the founder, CEO, or stakeholders are looking to liquidate the company. This is the final stage of a startup lifecycle.

There are several exit strategies; some of the common ones are:

• Initial public offering (IPO): The company lists its shares publicly either through a Special Purpose Acquisition Company (SPAC) or using a direct public offering.
• Acquisition: This happens when a company’s stockholders sell their stock or assets to a buyer.
• Merger: This exit strategy involves two or more companies coming together to become one.
• Liquidation: This process involves selling all your business assets to a buyer and converting them into cash.

💡 You can read more about mergers and acquisition advantages and disadvantages, and navigating cross border M&As.

Characteristics

Here are some of the characteristics of companies in the exit/decline stage:

• Large total addressable market
• Must have sustainable long-term growth potential
• Must have a strong management team and board of directors

Key considerations for an exit strategy

Below are some of the major milestones a company planning for exit must consider:

• Organise your financial statements and settle any outstanding
• Familiarise yourself with what the exit process entails
• Communicate your plan with investors, stakeholders
• Communicate your plan with your employees and customers

💡 Read more about developing a business exit strategy

Managing Decline

Here are some practical tips that can help you manage decline in your startup:

• Control your cash burn rate
• Adopt AI to increase efficiency
• Double down on your customers’ needs and focus on retention
• Build flexible systems that can adapt to your needs

Navigating Growth and Transitions Between Stages

One sure way to navigate this process is by establishing clear procedures instead of relying on people. Startups in the early stages usually rely on people. For example, a CEO or founder might be the only person who can clearly articulate a startup's value proposition.

While this might not be a big deal in the early stages, especially if the CEO is wearing multiple hats, it might be a major issue if the CEO has to step down or as your startup grows.

A good approach is to document and have a standardised process for onboarding other teams to have a clear understanding of the company’s value proposition. This way, the sales team won’t need the CEO when getting on a sales call.

Grow your startup globally with Wise Business

As your business progresses through different startup growth stages, managing finances efficiently becomes increasingly critical to your business success. This is where a payment platform like Wise Business comes in.

With a Wise Business account, your startup can enjoy:

• Lower-cost international transfers: Save money compared to traditional banks when sending international payments to suppliers, contractors, or employees
• Multi-currency accounts: Hold and manage money 40+ currencies, giving you flexibility as you expand into new markets
• Local account details: Receive payments as if you were a local business with account details in 8+ countries, making it easier for international clients to pay you (only with Wise Business Advanced)
• Accounting software integration: Streamline your financial management by integrating Wise directly to your existing accounting tools

Disclaimer: The UK Wise Business pricing structure is changing with effect from 26/11/2025 date. Receiving money, direct debits and getting paid features are not available with the Essential Plan which you can open for free. Pay a one-time set up fee of £50 to unlock Advanced features including account details to receive payments in 22+ currencies or 8+ currencies for non-swift payments. You’ll also get access to our invoice generating tool, payment links, QuickPay QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

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Sources used in this article:

1. Why Startups Fail: Top 12 Reasons l CB Insights

Sources last checked: 27-Oct-2025