You have early customers, growing usage, and a clear list of features to build next. To keep momentum going, you need seed capital and a partner who understands how B2B software companies scale. Yet the market is crowded with thousands of SaaS founders looking for checks, and hundreds of funds are competing to write them.
At Bonfire Ventures, we’ve operated at this stage for years. We’ve led hundreds of thousands of seed rounds, sat on hundreds of SaaS boards, and seen three out of every four portfolio companies close a successful Series A. So let’s just say: we know exactly what it takes to get a great B2B software startup funded and on track for long-term success.
The playbook below breaks down the patterns we’ve proven to work. It explains when to raise, how much to target, the metrics investors care about, and more. Use these steps to plan your round, approach the right partners, and turn fresh capital into lasting growth.
What is seed funding? How’s it different from pre-seed or series A?
Seed funding is the first institutional money most SaaS startups raise. It typically comes after friends and family or checks from angel investors, but before larger Series A rounds. At this stage, the product exists, early customers are onboard, and founders need capital to expand the team, build out features, and prove the model works.
Unlike pre-seed—which is often about validating the idea—seed is about showing the business can scale. And unlike Series A—which bets on repeatability—seed still allows for some iteration. Investors know the story is still being written so they’re betting on the team’s ability to move fast and find signals.
At seed, you’re not just raising capital—you’re choosing long-term partners. This is the round where things get real.
Why is seed funding important for startups?
Seed capital gives founders the breathing room to grow. It helps you go from a scrappy prototype to a solidified product with paying users, strong retention, and early revenue milestones. This money lets you hire a first layer of full-time team members and build the foundation for a repeatable go-to-market motion.
Seed funding is also often the first time you bring on long-term partners. Look for investors who stay close to the product, draw on real SaaS operating experience, open customer doors, and stay engaged all the way through the next round.
All about seed funding for B2B software startups
A good seed round gives you enough capital to build, learn, and prove the company can grow without forcing you to give away too much ownership. Here are some practical benchmarks many founders use to decide when to raise, how much to target, and how much equity to offer.
When would a founder raise seed funding?
Most founders open a seed round after three signals line up:
- Working product: You have a version customers can use without hand-holding. There may be minor bugs here and there, but generally, people should have an enjoyable experience with your product.
- Early revenue or strong usage: Paying customers are best, but rapid free adoption works if conversion looks likely. A 10 percent week-over-week usage growth for a month is enough to get attention from investors.
- Defined customer profile: You should be able to clearly describe who buys, what budget it comes from, and why they chose you over alternatives. This will serve as the evidence that you know where to pour the raised funds to get the most return for your investors.
If you meet those three tests, your time is better spent fundraising than waiting. If one piece is missing, focus on product or customer development first.
How much seed funding should a SaaS startup raise?
Work backward from the time you need to hit the next fundable milestone. Many founders plan for 18 months of cash runway. A simple rule of thumb says a full-time engineer costs about fifteen thousand dollars per month all-in. Five engineers for 18 months comes to roughly 1.35 million dollars. Add modest spend for sales, marketing, and infrastructure and most SaaS seed rounds land between two and five million.
Create two or three budget plans at different raise levels so investors can see how the company accelerates with a larger round and still makes steady progress if you close on the lower end. The goal is to raise enough to reach profitability or at least clear product-market fit. If hardware or heavy research and development pushes a second round, plan to raise what you need to get to that next proof point.
Raise what you need to get there—not just what looks good in a press release. More money can help, but it also means more dilution and pressure. A tight, focused raise with a smart plan can compete against a bloated round without a clear use of funds.
How much equity do founders offer during a SaaS seed round?
Most founders give up between 10 percent and 25 percent of the company in a seed round.
Let’s look at how that works in practice:
- Raise $1 million on a $10 million post-money valuation and you sell 10 percent of the company.
- Raise $3 million on a $20 million post-money valuation and you sell 15 percent.
- Raise $4 million on a $20 million post-money valuation and you sell 20 percent.
Lower valuations mean you sell more of your company for the same cash. Higher valuations mean you keep more of your company, but set a higher bar for your next round. Use these guidelines to maintain a healthy balance of trade-offs:
- Choose terms you can hit with realistic progress
- Keep dilution below 25 percent whenever possible
- Raise for roughly 18 months of runway so you’re not forced back to market too soon
- Prioritize investors who bring expertise, customer access, and follow-on support over squeezing out another percentage point of ownership
Seed funding options for B2B software startups
Most founders raise from venture firms, but it’s not the only way to get your startup off the ground. Depending on your product, runway, and traction, there are several ways to finance the next stage of growth. Each comes with trade-offs in ownership, control, and speed, so it’s worth knowing your options before kicking off the raise.
Venture capital firms
Venture capital is considered one of the best fits for most B2B SaaS seed rounds. A strong VC firm can lead the entire round, write a multi-million-dollar check, and stay committed through Series A and beyond. Good firms bring pattern recognition from dozens of past wins, dedicated platform resources for hiring and go-to-market, and the signaling power that attracts follow-on investors and enterprise customers.
These firms usually lead rounds with checks between $1M and $4M and a serious push to reach key milestones within 18–24 months.
Pros:
- Writes larger checks to help you scale product and GTM quickly
- Provides hands-on support with hiring, strategy, and follow-on prep
- Offers a strong network for customer intros and fundraising
- Dedicated talent, marketing, and finance support teams
- Helps close customers and future rounds by association with a strong brand
- Writes follow-on capital without hunting for a new lead
Cons:
- May face dilution
- You may give up a board seat
For example, here at Bonfire, we lead seed rounds exclusively for B2B SaaS companies and cap new investments at roughly six per year. That focus lets every founding team work directly with senior partners who have backed more than seventy SaaS startups.
Our typical check ranges from $2.5 million to $4 million, and we stay hands-on with hiring, pricing, and early enterprise sales. More than 75 percent of our portfolio companies raise a successful Series A—nearly double the industry average.
With $1B+ in assets under management and two top-decile funds, Bonfire is known for its deep sector expertise, operational insight, and long-term partnership with founders building meaningful software businesses. We meet weekly, make customer introductions, and remain on the board through the next round.
Learn about our successful B2B software investments.
Angel investors
Angel investors are high-net-worth individuals who invest their personal capital into early-stage startups. They often write smaller checks than venture firms—typically in the $25K to $100K range—but can be highly valuable if they’ve built or backed companies in your space.
Many SaaS angel investors are former founders, operators, or early employees at successful startups. This helps them provide guidance, intros, and empathy to your situation. Angels may participate in rounds led by VCs or come together in syndicates to write collaborative checks.
Pros:
- Makes fast decisions with less formalities
- Provides useful intros to talent, customers, and future investors
- Can be more flexible and founder-friendly than firms
- Can help bridge funding gaps
Cons:
- Writes smaller checks
- Offers less structured support and fewer ongoing resources
- Can clutter the cap table and add extra investor updates
- May not guarantee follow-on capital
Incubators or accelerators
Incubators and accelerators are programs that offer capital, mentorship, and early support in exchange for equity—typically around 5–10%. They help startups refine their pitch, build networks, and speed up product-market fit. Most last a few months and end with a demo day, where founders pitch to a curated group of investors. While some SaaS companies graduate with strong momentum, others may find the curriculum too generalized or the funding too small for their next phase.
Pros:
- Comes with built-in mentorship, workshops, and structured support
- Provides strong alumni networks for hiring and partnerships
- Demo day gives exposure to top investors
- Can be helpful for first-time founders or those breaking into tech
Cons:
- May be less useful for repeat founders or post-revenue companies
- Programs vary widely in quality and outcomes
- May require relocation or full-time participation
Crowdfunding
Crowdfunding lets startups raise money from a large pool of retail investors. Instead of pitching a few institutions, you market the opportunity to hundreds or thousands of smaller backers. Some SaaS companies use this to supplement a traditional round or build community around their product.
However, the process takes time, involves legal overhead, and rarely brings experienced support beyond capital.
Pros:
- Provides access to a broad pool of capital and supporters
- Comes with marketing momentum and user awareness during the campaign
- Can validate demand for consumer-facing SaaS products
Cons:
- Comes with lower average check sizes, with lots of investors to manage
- Requires time-intensive campaign planning, marketing, and compliance
Bootstrapping
Bootstrapping means funding the company with founder savings and early customer revenue instead of outside capital. SaaS teams can start this way to keep full control and validate the product before giving up equity. Revenue-funded growth forces discipline on unit economics, pricing, and cash management. It can also strengthen your story later when you decide to raise, because investors see a capital-efficient business with paying users.
Pros:
- Allows for zero dilution and full decision-making control
- Builds a culture of efficiency and profitability
- You can set your own pace without investor pressure
- Demonstrates traction when you later approach VCs
Cons:
- Limits growth by cash flow, slowing product and hiring plans
- Comes with personal financial risk for founders
- Can be harder to pursue big market swings or long R&D cycles
Grants
Grants are non-dilutive funds from governments, foundations, or research institutions. Programs like the US Small Business Innovation Research (SBIR) or National Science Foundation (NSF) can cover R&D, prototyping, or commercialization work. For SaaS founders tackling technical or scientific challenges—like cybersecurity, data science, and healthcare IT—grants offset engineering costs without adding investors to the table.
Pros:
- Money comes with no ownership strings attached
- External validation can impress customers and future investors
- Supports deep tech or compliance-heavy projects that VCs may avoid
Cons:
- Requires lengthy applications and competitive review cycles
- Funds are often restricted to certain line items or project phases
- Ongoing reporting and audits can add administrative overhead
- Grant amounts may be smaller than a VC round
How to get seed funding
Securing seed funding looks different depending on your funding path. A grant application isn’t the same as pitching a VC firm, and bootstrapping doesn't involve negotiation at all.
But, if you’re raising from institutional investors or angels, follow these steps to lay the groundwork for serious conversations with funders.
1. Create your pitch
Your pitch needs to answer two questions: Why does this product matter, and why are you the team to build it? Lay out the problem, your solution, early proof points, and the size of the opportunity.
Make sure the pitch is easy to understand, so investors can buy into your vision immediately. Overexplaining or leaving out key information can add unwanted friction and cost you the deal.
2. Understand what metrics investors are looking for
Seed-stage investors don’t expect fully scaled metrics, but they do want early proof that your business is working. The more traction you can show, the easier it is to justify your valuation and raise on favorable terms.
Include these metrics that VCs and angels look for in SaaS seed rounds:
- Revenue: Any recurring dollars from paying customers. Even a few thousand in monthly recurring revenue (MRR) proves someone will pay for the product.
- Growth rate: Month-over-month percentage increase in revenue or active users. Double-digit monthly growth still shows momentum, even if the base is small.
- Customer retention: The percentage of customers who stay and keep paying after onboarding. High retention indicates the product is working as intended.
- Customer acquisition cost (CAC): The all-in cost for ads, sales time, marketing spend required to land a new customer. Lower CAC tells investors you can scale very efficiently.
- Lifetime value (LTV): The total revenue you expect from a customer over their lifetime. A higher LTV can help offset some of the CAC because you know you will make more money over the long term.
- Engagement: This is simply how often users log in, run workflows, or hit key usage milestones. Frequent use hints at stickiness and future upsell potential.
Not every startup has every number, and that’s okay. What matters is being honest about what’s working, what’s not, and what you’re doing to improve.
3. Prepare for due diligence
Once you get investor interest, they’ll need to validate the details before wiring funds. That means having your materials and data ready to go. Good prep speeds up the close and builds trust.
A typical due diligence request for seed-stage SaaS startups may ask for:
- Financials: Profit & loss statement, cash flow, basic projections
- Cap table: Equity breakdown among founders, employees, and prior investors
- Customer data: Number of active customers, retention numbers, Net Promoter Score (NPS) if available
- Product roadmap: What’s been built, what’s planned, and hiring needs
- Legal documents: Incorporation paperwork, IP ownership, and any contracts
Having these files ready signals that you run a tight operation, even at an early stage, and keeps closing friction low.
4. Negotiate the seed funding with investors
Negotiations usually revolve around valuation, ownership, and deal terms. Be clear about what you’re raising, how much equity you’re offering, and how you plan to use the money. Investors will bring their own expectations, but again, most early-stage deals land in the 10–25% dilution range. You can also negotiate terms like board seats, pro rata rights, and follow-on support.
If you have multiple term sheets, you can use them to calibrate offers—but don’t drag things out too long. The best investors want to close quickly and help you get back to work.
5. Build your relationship
Your investor will be with you for years, helping with strategy, hiring, and future rounds. So once the deal closes, keep the relationship strong. Set up regular updates and ask for help when you need it. Share both wins and challenges openly.
At Bonfire, we love transparency because the sooner we know what’s going on, the faster we can help. Every portfolio company keeps us in the loop with regular calls, shared dashboards, and quick check-ins. A second set of eyes on product, pricing, or hiring decisions in real time often saves weeks—or even months—of spinning wheels. Founders who stay closely connected tend to move faster and avoid early mistakes.
6. Properly manage your seed money
Seed capital gives you the runway to grow, so use it intentionally. The focus is to hit your next milestone without running out of cash or bloating the team. Prioritize spending on things that move the business forward, like shipping features, acquiring users, and validating key assumptions.
Avoid overhiring or long-term commitments until your model is working. And don’t worry about being perfect. Investors know early budgets are rough. What matters is that you’re thoughtful about burn, transparent about results, and willing to adjust when needed.
Find the right seed funding for your B2B software startup
You now know when to raise, how much to target, the metrics that matter, and the documents investors will ask for. With those basics in place, the next step is to choose the funding path that matches your goals, build a focused investor list, and start the conversations.
If you’re looking for a focused VC partner for your B2B business, we’d love to speak with you at Bonfire Ventures. We’ve built our entire approach around helping B2B SaaS founders win—and only B2B SaaS. Working with industries from FinTech to Healthcare, over 75% of Bonfire-backed companies raise successful Series A rounds.
Every company we invest in is solving real problems for real businesses, and we bring hard-won experience from decades of operating, scaling, and supporting SaaS companies across different industries and growth stages. We don’t just write checks—we roll up our sleeves, offer honest feedback, and connect founders to the people, resources, and opportunities that move the needle.
If you’re ready to raise seed funding for your B2B software startup, make sure you’re backed by a partner who understands what it takes to get to the next milestone—and beyond. Let’s build something enduring together.
Learn more about raising with Bonfire Ventures.
