Key insights from initial funding rounds, January 2025–March 2026

Introduction

This report examines completed initial funding rounds on the FounderCatalyst platform from January 2025 through March 2026.

Whether you're preparing to launch a round or benchmarking one already in progress, the data inside covers the metrics that matter most - valuations, dilution, raise sizes, investor behaviour, and scheme usage.

Scope

The data covers rounds on the FounderCatalyst platform with pre-money valuations (PMV) between £500K and £5M, and raise sizes between £25K and £1M. These boundaries keep the findings grounded in typical early-stage activity, preventing outliers at either extreme from distorting the picture.

What did the data show?

1. Typical round size is £100K–£250K — nearly half of all rounds fall in this bracket, and fewer than 3% exceed £500K. Smaller raises are the clear norm, not the exception.
2. Most founders price at £1M–£2M pre-money — this single bracket accounts for 34.1% of all rounds, and nearly two-thirds of rounds sit between £1M–£3M. Valuations above £3M are rare (just 14.6%) and can actively deter investors without strong evidence to back them up.
3. SEIS dominates up to £250K — it's used in 92% of rounds at that size. It's the default tax structure for early-stage UK raises, and the 50% income tax relief makes it a powerful tool for attracting angels.
4. Dilution climbs sharply as rounds grow — raising more doesn't meaningfully push up valuations at this stage, so additional capital simply costs more equity. Rounds in the £500K–£1M range see dilution reach around 20%.
5. The typical angel writes a £5K–£25K cheque — these three bands together account for nearly 68% of all investments. Successful rounds are built from many smaller commitments, not a handful of large ones.

Distribution of round sizes

This chart breaks down rounds by size, revealing where most founders set their targets. Raises above £250K are the exception rather than the rule — just one in ten rounds crosses that threshold, and fewer than 3% exceed £500K. Nearly half of all rounds fall between £100K and £250K.

The concentration of smaller raises isn't surprising. Many founders use an initial round on FounderCatalyst as a springboard for Agile Funding — a structure that allows subsequent investment to be taken in over time rather than closed all at once. New investors join by signing adherence agreements that bind them to the existing round paperwork, removing the need to coordinate everyone simultaneously. This matters because lining up investors in lockstep creates real risk: people lose conviction, find other opportunities, or simply go cold on the deal. Agile Funding sidesteps that problem, letting founders raise at their own pace, move quickly when the right investor appears, and stay focused on building the business rather than managing a closing process.

Valuation vs dilution by round size

This chart maps the relationship between raise size, average dilution, and pre-money valuation. The pattern is clear: dilution climbs as raise size increases, reaching around 20% for rounds between £500K and £1M, where the average PMV sits at approximately £2.1M.

The prevalence of smaller, lower-dilution rounds ties back to the Agile Funding dynamic described above. Founders closing a modest initial round can still justify a typical early-stage PMV of around £1.5M, while giving up less equity than the standard 15–20% - with the intention of topping up through an agile round as momentum builds.

Another interesting finding is that raising more doesn't materially shift the valuation. At an early stage, there's often limited evidence to justify a significantly higher PMV, so asking for more simply means diluting further rather than commanding a better price. The implication is practical: raise what you need now, protect your equity, and return to the market later when traction, revenue, or other milestones give you the basis for a stronger valuation.

Distribution of pre-money valuations

Nearly two-thirds of rounds (65.8%) carry a pre-money valuation between £1M and £3M, with the £1M–£2M bracket being the single most common at 34.1%. Valuations above £3M are relatively rare, accounting for just 14.6% of rounds — and nothing in the dataset exceeds £5M, pointing to a natural ceiling in what early-stage investors are willing to accept at this stage.

If you're considering a valuation above £3M, tread carefully. Without clear evidence — meaningful traction, defensible IP, or a team with a strong track record — a high PMV is more likely to deter investors than attract them. It can also store up problems for your next round if growth doesn't keep pace with the implied ambition. The data suggests most founders at this stage anchor in the £1M–£2M range, and for good reason: it's a price that reflects realistic early-stage risk while leaving room to step up at the next raise.

Tax scheme usage by round size

SEIS dominates at smaller raise sizes, peaking at 92% of rounds in the £100K–£250K bracket. Below £100K, the presence of EIS-only rounds most likely reflects founders who are outside the three-year trading window required for SEIS eligibility, meaning EIS is their only option even on a first round on the platform.

The picture shifts above £250K. Half of rounds in the £250K–£500K range use a combined SEIS and EIS structure — taking SEIS up to the £250K cap and allocating EIS beyond that. FounderCatalyst supports this through a dual round structure, where investors can be allocated to either scheme within the same raise, either on a first-come-first-served basis or pro-rata across all investors. It's worth noting that dual rounds require careful management at closing: SEIS and EIS shares cannot be issued on the same day, so fund transfers and share certificates must be sequenced precisely to protect eligibility under both schemes.

The 100% EIS-only rounds at the £500K–£1M level most likely reflect founders who have already exhausted their SEIS allowance in a prior raise but who are raising on FounderCatalyst for the first time having previously funded off-platform — rather than SEIS being unavailable in principle.

A few practical takeaways: SEIS is always worth pursuing if you're raising from UK investors — the 50% income tax relief is a powerful incentive at any raise size, and securing advance assurance early should be a priority. If you're heading above £250K, plan your SEIS and EIS allocation before you launch rather than after. EIS offers substantial room to grow, with limits of up to £10M in a single year and £24M over a company's lifetime, making it well suited to support larger raises as your business scales.

Investor ticket size distribution

The three bands between £1K and £25K each account for roughly 22% of all investments — remarkably consistent, and together representing nearly 68% of all tickets on the platform. Add in the sub-£1K slice and almost three quarters of all investments fall below £25K. Cheques above £50K are the exception, making up just 11.4% of investments, and only 3.1% exceed £100K.

The typical FounderCatalyst angel commits somewhere between £5K and £25K. Plan your investor funnel around that reality, not around institutional-scale expectations — a healthy round on this platform is usually built from many smaller commitments rather than a handful of large ones.

Summary

The picture that emerges from this data is consistent: early-stage rounds on FounderCatalyst are typically £100k-£250k in size, SEIS-led, and funded by a broad base of angel investors writing cheques in the £5K–£25K range rather than a small number of large commitments. Most founders raise below £250K at a PMV of £1M–£2M - a pragmatic combination that preserves equity while leaving room to step up valuation at the next raise.

The strategic logic behind this is deliberate, not accidental. Many founders are closing a smaller initial round precisely to unlock Agile Funding, protecting dilution now while retaining the flexibility to raise more as the business develops and the valuation case strengthens.

As rounds grow larger, the trade-offs become more pronounced. Raising more doesn't materially lift valuations at this stage, which means additional capital comes at the cost of greater dilution. Scheme structure also shifts — SEIS dominates up to £250K, dual rounds become common beyond that, and EIS takes over entirely at the top end of the range.

The data doesn't suggest founders should raise less than they need — but it does suggest that raising in stages, with a clear plan for how SEIS and EIS eligibility will be used, is the approach that most successfully balances capital, equity, and investor appeal.

Next steps

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About FounderCatalyst: FounderCatalyst helps UK founders get investor-ready, close funding rounds, and build motivated teams. For a fixed fee of £1,495 + VAT - no subscriptions, no percentage of your raise - we handle everything from SEIS and EIS advance assurance and fundraising legal paperwork, to data rooms, cap table management, and EMI and unapproved share option schemes.