How early funding actually works — the ladder, the instruments, and the docs you'll sign

The frame Raising money is not a milestone — it's a decision to trade ownership and optionality for speed. Plenty of good companies never raise. If you do, raise the smallest amount that reaches a clear next milestone, from people who help, on standard terms. The ladder · Bootstrap / revenue — you own everything; the constraint is time. · Friends, family, angels — small cheques, usually on a SAFE or note. Fast and informal, but real personal risk for them — treat it seriously. · Seed — institutional money to find product-market fit. SAFEs or a priced round. · Series A — a priced equity round against real traction and metrics. A different game, and different reading. The instruments · SAFE — "simple agreement for future equity". Money now; investors get shares in the next priced round, usually with a valuation cap and/or a discount. No interest, no maturity date. YC publishes the standard documents free. · Convertible note — like a SAFE but it's debt: interest and a maturity date, more founder-unfriendly edge cases. Less common now. · Priced round — you agree a valuation and issue shares, often preferred. Real legal cost and real diligence. · In India — SAFEs aren't a native instrument. Funds use variants like the iSAFE note (popularised by 100X.VC), or CCPS (compulsorily convertible preference shares) in priced rounds. Non-dilutive options in India · Startup India Seed Fund Scheme (SISFS) — grants up to ₹20L for proof of concept and up to ₹50L for scaling, routed through approved incubators, for DPIIT-recognised startups under two years old. · State startup missions and sector programmes (BIRAC for biotech, for instance) run their own grants. What a term sheet actually contains Valuation and amount are the headline. The terms that matter as much: liquidation preference, board composition, pro-rata rights, and the option pool size — including whether it's carved out pre- or post-money, which changes your effective valuation. Read "Venture Deals" before you sign one. Cap-table hygiene From the first cheque: keep a clean cap table, issue equity through proper board resolutions, put every founder and early hire on vesting, and never hand a large chunk to an advisor or agency for vague "help". A messy cap table kills more Series A rounds than weak metrics do.