What Startup Founders Should Know Before Raising Series C Funding in 2025
What Startup Founders Should Know Before Raising Series C Funding in 2025
Raising money for a startup is never easy, but in 2025, it’s even harder—especially for founders trying to raise a Series C round. Many believe that funding has dried up. But according to Cathy Gao, a partner at Sapphire Ventures, capital is still available. The real challenge is getting access to it.
At a recent TechCrunch conference, Cathy Gao shared valuable advice for startup founders. She explained that today’s market is very different from what we saw just a few years ago. Investors are being much more careful with their money. They are no longer interested in hype or fast growth alone. They want certainty. They want to invest in companies that are clearly going to win in their industries.
Let’s break this down step-by-step so you understand what really matters when you're preparing to raise Series C funding in 2025.
Only a Few Startups Reach Series C
Before we talk about how to raise a Series C round, here’s a harsh truth: only one out of every five startups that raise Series A ever make it to Series C. That means 80% of companies never reach this stage. If you’ve made it to this point, you’ve already beaten the odds. But now, the bar is higher than ever.
Investors in 2025 are asking tougher questions. They don’t just want to know if your company is growing. They want to know if your company is on track to dominate its market. They’re thinking long-term.
Investors Ask: Is This a Market Leader?
In the past, a fast-growing company with rising user numbers could raise money quickly. But now, growth isn’t enough. Investors want to know:
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Is your startup the clear leader in its industry?
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Is your brand defining a category or creating a new one?
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Are your customers loyal?
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Can your company keep growing without spending too much?
These are the new standards for Series C funding.
Cathy Gao explained that successful companies at this level usually meet these points:
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They are category leaders.
They dominate their market or are clearly on the path to doing so. -
They have a solid business model.
Investors want proof that the company knows how to make money and spend wisely. -
They have “pull” from the market.
Customers want the product or service without needing aggressive marketing.
Good Metrics Aren’t Enough Anymore
Startups are often proud of their data—revenue, user growth, retention rates, and so on. While this is important, Cathy Gao says that even strong metrics won’t guarantee Series C funding.
Investors are now looking deeper. They want to believe in the company’s long-term vision. A startup may not have perfect numbers today, but if it has a powerful story and vision, it can still attract funding.
Gao shared an example where a startup didn’t have the best numbers but still got a $2 billion valuation. Why? Because they convinced investors that they would be a market leader over time.
So here’s the point: storytelling and vision matter—a lot.
Avoid Chasing Short-Term Fame
Many startups get excited when their product goes viral. But fast growth isn’t always a good sign if it’s not sustainable. In fact, it can sometimes be dangerous.
Gao pointed out that with AI and new technologies, some companies grow faster than ever. But what goes up quickly can also fall just as fast. That’s why investors are asking: “Is this growth stable?”
They look for signs of compounding growth, meaning the business gets stronger as it grows. For example:
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Does each new customer improve the product or service for everyone?
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Do customer acquisition costs go down as more users join?
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Does the brand become more trusted and popular with time?
If the answer is yes, investors will likely be very interested. If not, even good numbers might not save the deal.
Think of Fundraising as a Marketing Campaign
Another big tip from Gao is that startup founders should treat fundraising like a product launch. You can’t just show up and pitch to random investors. You need a plan.
Start building relationships with investors early. Don’t wait until you need money. Introduce them to your company, tell your story, and keep them updated. This builds trust over time.
Sapphire Ventures, for example, often invests in companies at Series B. But they usually start building a relationship with the founder during Series A—or even earlier. They want to see how the company grows over time.
This gives investors a “long-term view” of your startup. They know your ups and downs. They can see your progress, your decisions, and how you handle challenges. That makes it easier for them to say yes when the time comes.
Start an Investor Relationship Database (CRM)
If you’re serious about raising Series C funding, start keeping track of your investor contacts. Create a simple system—a spreadsheet or CRM—where you note:
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The name of the investor or partner
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Their firm
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What types of companies they like
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What startups they’ve recently funded
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What feedback they gave you
Then, send regular updates to this list—maybe every 2 or 3 months. Share your progress, milestones, or lessons learned. You don’t need to ask for money. Just keep them in the loop.
This kind of communication shows maturity, and it keeps your startup top of mind.
Don’t Start Fundraising Without Signals
Timing is everything at the Series C stage. According to Gao, you should never enter a fundraising round until multiple investors have already shown strong interest.
The biggest mistake founders make is rushing into a raise with no real signals. They pitch to 50 different firms and hope one says yes. That’s a recipe for burnout—and rejection.
Instead, wait until at least 3–5 firms are showing real signs they want to invest. This gives you momentum. It creates competition. And it can lead to better terms and a faster close.
Remember: the goal is not just to raise money—it’s to raise smart money from the right investors at the right time.
What Series C Investors Want to See in 2025
Let’s summarize what investors are looking for before they invest in your Series C round:
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Clear Leadership in a Market
Are you the best in your niche? Do you lead or define the space you’re in? -
Strong and Smart Growth
Are you growing efficiently—not just fast? Are your systems built to scale? -
Proof of Long-Term Potential
Is there a clear path to dominance? Will your company be more powerful with time? -
Solid Storytelling
Can you make investors believe in your company’s future—even if your current metrics aren’t perfect? -
Existing Relationships
Have you spent time building trust and interest among VCs before asking for money? -
Sustainable Traction
Will customers keep coming back? Are your costs going down while your value goes up? -
Timing and Readiness
Are you entering the market with strong signals from multiple firms?
Final Thoughts
In 2025, raising Series C funding is about more than just growth or good numbers. It’s about trust, vision, and showing that your startup is built for the long game.
Founders need to think like strategists. Build early relationships with investors. Focus on sustainable growth. Tell your company’s story in a way that connects emotionally and logically. And most importantly, raise funds when the signals are right—not just when your bank balance says it’s time.
If you follow these steps and prepare properly, you won’t just raise Series C funding—you’ll build the kind of company that makes it all the way to IPO or acquisition.
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