Six Phases of Customer Development and Fundraising

If you’ve ever been confused about the various stages of a startup, what you need to raise and for what purpose, here’s a cheat sheet.

The startup lifecycle consists of six stages – Discovery, Validation, Efficiency, Scale, Sustain & Conservation. This is viewed exclusively through the lens of customer acquisition, because when it comes to growing a business, that’s what everything else rests upon. Venture funding directly ties to those stages, but almost no one ever speaks in those terms.


What to do at this stage: Figure out how to, in a prospect’s own words, articulate the problem or opportunity they face, the impact of that problem/opportunity, and the value of a solution.

Funding Stage: Generally, this is the Pre-Seed stage, but you can and should complete customer discovery with no capital. The Pre-Seed investment should be used to develop and release an MVP.

How to Raise a Pre-Seed: Sell your Team and Dream.


What to do at this stage: Prove you can close qualified prospects by describing the above and offering a solution that resonates. You should also be able to deliver that solution successfully.

Funding Stage: Seed Stage. 

How to Raise a Seed: Generate limited traction based on the MVP and tie to an amazing market opportunity.


What to do at this stage: Test a dozen different methods of customer acquisition and find the one(s) with the lowest CAC. Begin to establish the LTV of your customers.

Funding Stage: Series A. 

How to Raise a Series A: Historically, get to $1M ARR. These days, it’s closer to $2M.


What to do at this stage: You already know how to close qualified prospects. You just learned how to efficiently acquire qualified prospects. Go raise a ton of money and scale up your sales and marketing machine.

Funding Stage: Series B. 

How to Raise a Series B: Business Fundamentals and Spreadsheets. 


What to do at this stage: Bearhug your customers by offering a broader suite of solutions that make it impossible for them to go somewhere else.

Funding Stage: Series C and beyond. IPO.

How to Raise a Series C: Massive Amounts of Traction.


What to do at this stage: Don’t mess it up. Ideally, figure out how to innovate yourself to pieces before someone else does it for you.

Funding Stage: Secondary Public Offerings. Debt. Private Equity.

How to Raise Secondary: A Brand that Matters.

If you want, you can print out this handy table (courtesy of Isa Merjanian) and glue it to the wall above your desk.

— Eric Marcoullier

(Photo by Alexia Saumon on Unsplash)

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