Understanding US funding rounds, SAFEs, and early dilution

US startups generally raise capital in stages, with each round serving a specific purpose. Investors don’t expect perfection early on, but they do expect founders to understand what each round is meant to achieve.

These stages typically consist of pre-seed, seed, Series A, Series B, and Series C funding rounds. Each round builds on the previous one, so if you skip the work expected at an earlier stage, later rounds become much harder to close.

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In the US, many early-stage rounds are raised using Simple Agreements for Future Equity or SAFEs. Unlike priced rounds, SAFEs don’t assign a valuation upfront. Instead, they convert into equity later, usually at your next priced round.

SAFEs are popular because:

• They’re faster to close than priced equity rounds
  
• They reduce legal costs early on
  
• They let founders raise capital while still refining valuation
  

However, SAFEs can also create dilution risk, especially for global founders raising from multiple investors over time. Because SAFEs delay valuation, it’s easy to lose sight of how much ownership you’re actually giving away. Each SAFE may feel small in isolation, but when several convert at once, the impact compounds quickly.

Most dilution surprises don’t come from a single bad decision. They come from a series of reasonable ones made without a clear ownership model. Common scenarios include:

• Raising multiple SAFEs with different valuation caps
  
• Adding discounts without modeling their combined effect
  
• Accepting small checks without tracking cumulative dilution
  

For example, you might raise USD $500,000 on a SAFE with a USD $5 million cap, then raise another USD $300,000 later with a USD $7 million cap.

When you close a Series A at a USD $15 million valuation, both SAFEs convert based on their caps (or discounts), not the Series A price, often resulting in more dilution than founders expect. Early investors receive a larger ownership stake than many founders anticipate.

This isn’t a flaw in the system. It’s how US investors are rewarded for early risk. But it does mean you need to understand the mechanics before stacking SAFEs round after round.

For global founders, SAFEs are only one part of the learning curve. They also often encounter other fundraising realities in the US that don’t surface until they’re already in conversations with investors.

What surprises global founders when raising capital in the US

The US venture ecosystem is large, liquid, and intensely competitive. There are thousands of active angel investors and more than a thousand venture firms. But access doesn’t mean ease.

For many global founders, US fundraising comes with a few surprises. Often not because the business is weak, but because the rules of the game are different.

Surprise 1: US investors rely on pattern recognition

The US venture market runs on volume. Thousands of founders pitch investors every year, which forces investors to make fast decisions based on familiar patterns.

When a new pitch lands, investors are often subconsciously asking:

• Does this founder look like someone who can win in the US?
  
• Does this business resemble successful companies we’ve backed before?
  
• Do the signals feel familiar and low-friction?
  

This doesn’t mean US investors only back US-born founders, and it doesn’t mean you need to fit a narrow “founder stereotype.” In reality, many US funds actively invest in global teams.

What matters is whether you show clear signals that you understand how the US market works—culturally, commercially, and operationally. When those signals are missing, investors rarely ask for clarification. They usually pass quietly and move on to the next pitch.

How to navigate it:

Anchor your story in a US-specific experience. Reference real customer conversations, early pilots, or operational decisions you’ve made with the US market in mind. The more concrete your signals, the less guesswork investors have to do.

Surprise 2: Fundraising in the US is highly localized

Many global founders assume that raising funds in the US means pitching “the US market” as a whole. In practice, the ecosystem is still highly local. Startup hubs such as Silicon Valley, New York, Austin, Boston, and Miami each have different sector strengths, risk appetites, and expectations around growth, margins, and timing

For example, a New York–based fintech investor often evaluates compliance risk, monetization, and enterprise readiness earlier than a SaaS-focused investor in the Bay Area. Treating the US as a single, uniform market makes your pitch sound generic and signals a lack of on-the-ground understanding.

How to navigate it:

Decide where your story fits best before you pitch. Narrow your focus to specific cities, sectors, and investor types, then tailor your narrative to match how those investors think about risk and growth.

Surprise 3: Warm intros matter far more than cold outreach

US investors place enormous weight on trust and social context. As a result, warm introductions consistently outperform cold outreach. In fact, the 2025 Founders Forum study revealed that 82% of venture deals come through warm introductions. When interest is real, US investors can move from a first meeting to a term sheet in weeks.

Cold emails, however, typically have very low response rates. Many conversations never start, and others end after one or two calls.

This doesn’t mean your idea is bad. More often, it means there’s no trust bridge yet. For global founders like you, this can feel frustrating, but it also clarifies where to focus your energy.

How to navigate it:

Start building relationships long before you raise. Map investors who have backed global founders or companies in your sector. Engage early, share updates, and ask for advice—not money.

When you do get a meeting, signal that you’re looking for a long-term partner, not just a check. In the US, trust compounds faster than traction.

5 signs that tell investors you’re US-ready

Many global founders approach US fundraising too early. They assume traction in another market will carry the conversation.

In reality, it rarely does. The US isn’t just a larger version of your home market. Customer behavior is different, compliance expectations are higher, and competition for capital is intense. As a result, US investors look for specific signals of readiness before engaging seriously.

Below are five signals investors often use—sometimes subconsciously—to decide whether you’re ready to raise in the US.

1. A clean, compliant structure

US investors expect a company structure that feels familiar, standard, and low-friction. In most cases, that means a properly formed Delaware C-Corporation with no structural ambiguity.

At a minimum, investors expect to see:

• A properly formed C-Corporation (often Delaware)
  
• Founder equity issued and documented
  
• Founder equity aligned with common US investor expectations, typically including a four-year vesting schedule with a one-year cliff
  
• A clear, accurate cap table with no surprises
  

Therefore, all you need to prepare before sending your pitch is:

• Understanding when and how you will set up or flip into a Delaware C-Corporation
  
• Formalizing all founder and advisor equity
  
• Cleaning up undocumented SAFEs, notes, or side agreements
  
• Using a cap table tool investors recognize and trust
  

Being US-ready here isn’t about sophistication; it’s about preparation. Founders who formalize equity early, clean up side agreements, and use cap table tools investors already trust remove friction before it appears.

2. Updated and tidy bookkeeping

US investors don’t expect perfect financials at an early stage. What they do expect is visibility. They want to understand where your money went today and yesterday so they can trust how you’ll deploy it tomorrow.

Being US-ready from a bookkeeping perspective usually means:

• Your books are current, not months behind
  
• Transactions are categorized and reconciled
  
• You can produce a basic P&L, balance sheet, and cash position when asked
  

Therefore, all you need to prepare before sending your pitch is:

• Move off ad-hoc spreadsheets and into proper accounting tools
  
• Reconcile accounts regularly, not only before fundraising
  
• Separate personal and business expenses cleanly
  
• Know your monthly burn and cash balance at all times
  

3. You can clearly answer “Why the US?”

Saying “the US is a big market” isn’t enough. Investors want to know why US customers specifically need your product, and how that need shows up in real behavior.

Strong signals include:

• US customer interviews or discovery calls
  
• Early pilots, design partners, or waitlists
  
• Clear insight into how US buyers differ from those in your home market
  
• Adjustments you have already made based on US feedback
  

Home-market traction provides useful context, but it isn’t proof. Investors want to see that you’ve tested assumptions locally, not imported them unchanged.

4. A realistic go-to-market plan

Investors aren’t looking for grand visions. They’re looking for founders who know exactly what to do with their money in the near future. Therefore, when assessing your pitch, they also want to know whether you can execute your go-to-market plan.

A US-ready go-to-market plan can usually answer:

• Who your first US customers are
  
• How you plan to reach them
  
• Which channels you will test first, and why
  
• What you’ll do differently in the first 90 days after raising
  

However, please note that US investors don’t always expect certainty. They know early-stage plans will change, so they understand that markets shift, assumptions break, and execution rarely follows a straight line. What matters is that you can show them that you have thought seriously about how you’ll execute in the US, not just that you want to.

5. You know your numbers

You don’t need a finance background to raise in the US, but you do need financial fluency. Investors expect founders to know the basics of their business without checking notes or turning to a spreadsheet mid-conversation.

Investors want to take you to the next step if you know:

• How much runway you have left
  
• How much does it cost to acquire one customer
  
• Which costs drive spending today
  
• How fresh capital will actually change your company’s trajectory
  

These answers don’t need to be perfect or overly polished. Investors understand that forecasts evolve, so what matters is that the logic behind the numbers is sound and consistent.

Knowing your numbers isn’t about impressing investors. It’s about showing control. When you can speak comfortably about burn, runway, and trade-offs, you signal that capital will be deployed intentionally, not reactively.

Fundraising mistakes that stop deals before they start

Most US fundraising failures don’t happen after a partner meeting or a pricing discussion. They happen much earlier, even often before an investor finishes your deck or agrees to a first call. Below are some of the most common mistakes that quietly stop deals before they even begin.

1. A pitch deck that lacks a US angle

A polished deck isn’t enough if it doesn’t answer the most basic investor question: Why the US?

Several global founders reuse a home-market deck and simply translate it for US investors. The result is a story that explains what the company does, but not why it belongs in the US market.

This becomes a problem when your deck:

• Doesn’t explain the specific US problem you’re solving
  
• Treats the US as a generic expansion opportunity
  
• Fails to show how you’ll win your first 10 US customers
  

US investors don’t expect nationwide dominance on day one. They want clarity on where you’ll start, who you’ll sell to first, and why those early users will choose you. Without that, your deck feels incomplete, even if the product is strong.

2. Unclear ownership or cap table issues

If founder equity isn’t properly issued, vesting isn’t set, SAFE notes are undocumented, or early investors aren’t clearly recorded, investors don’t see upside. They see risk.

Common red flags include:

• Founder shares that exist “in principle” but not on paper
  
• Missing or non-standard vesting terms
  
• Side agreements that don’t appear on the cap table
  
• Inconsistent records across documents
  

These issues rarely lead to questions. More often, they lead to silence. Investors assume cleanup will be painful and decide it isn’t worth the effort.

3. No clear understanding of your US target market

Another deal-stopper is when founders can’t clearly explain who they’re selling to in the US. Therefore, if you struggle to describe:

• Your core US customer segments
  
• Local buying behavior and expectations
  
• US-specific pricing sensitivity
  
• How competitors position themselves differently in the US
  

Investors start to doubt whether your traction can translate. Even strong growth elsewhere won’t compensate for a vague understanding of the US customer.

US investors don’t expect perfection. They expect evidence that you’ve done the work to understand the market you’re entering.

4. Messy financial reporting

Messy reporting signals a lack of control. If your bookkeeping is outdated, reliant on unsynced spreadsheets, or unable to produce a clean P&L or runway calculation, investors hesitate to move forward.

• This usually shows up when:
  
• Financials lag several months behind
  
• Numbers change between meetings
  
• Cash position can’t be clearly explained
  
• Burn rate has to be recalculated live
  

US investors know early-stage numbers evolve. What they want is consistency and visibility—not last-minute cleanups.

5. Compliance red flags that raise trust concerns

Finally, some deals stop simply because compliance risks feel unresolved. Common red flags include:

• Incorrect or missing state registration
  
• Missed annual filings, such as Form 5472
  
• Employee or contractor misclassification risk
  
• No US business address or registered agent
  
• Adoption of high-risk tax avoidance strategies, disputes with tax authorities and any history of noncompliance with tax laws, which could result in large tax bills and penalties when found out.
  

Even when these issues are fixable, they create uncertainty. And in competitive deal environments, uncertainty is often enough for investors to move on.

How you can find and access US investors

Finding US investors isn’t about blasting your pitch deck to as many inboxes as possible. For global founders, access is earned through focus, credibility, and relationship-building—often well before you formally start raising.

Below are the most effective ways founders successfully break into US investor networks.

Start with investors who already back global founders

Not all US investors are equally comfortable backing international teams. Your odds improve significantly when you focus on funds and angels who have already invested in global founders or cross-border businesses.

Look at:

• Portfolio companies with non-US founders
  
• Funds that actively invest outside Silicon Valley
  
• Investors who specialize in your sector and stage
  

This reduces the need to “explain” why you’re global and allows the conversation to focus on execution and opportunity instead.

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Use accelerators and founder programs strategically

Accelerators aren’t just about funding. For global founders, they’re often a shortcut to credibility and investor access.

Programs like Y Combinator, Techstars, and 500 Global are built to support international teams and provide structured exposure to hundreds of US investors through Demo Days and alumni networks. Even if you don’t apply or get accepted, many programs run open events, office hours, and founder communities that are valuable on their own.

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Be present in the US—even temporarily

Physical presence still matters more than many founders expect. Many US investors prefer to back founders they’ve met in person, especially at the seed and Series A stages.

You don’t need to relocate immediately. Short, focused trips can be enough to build momentum. Founders who succeed often:

• Schedule back-to-back meetings during US visits
  
• Attend local startup events or conferences and founder dinners
  
• Use trips to deepen existing investor conversations
  

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Build relationships before you need the money

The most effective fundraising starts long before you open a round. Investors are far more receptive when they’ve seen your progress over time. Therefore, by the time you formally raise, many conversations are already warm, and the trust bridge between you and the investors is gradually developing.

Here are some simple yet effective ways you can do to build relationships with prospective investors after reaching out to them.

• Share brief monthly or quarterly updates
  
• Ask investors for feedback, not capital
  
• Show how you learn and adapt
  

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Want a detailed, step-by-step playbook for starting in the US?

Raising capital in the US is only one part of the journey. For global founders, the real challenge is aligning company structure, banking, compliance, and fundraising readiness so nothing breaks when investor interest finally shows up.

If you’re looking for a more practical, end-to-end guide, we’ve put together the ultimate startup guide to entering the US. It’s designed specifically for global founders who want fewer surprises and more clarity as they enter the US market.

Inside the guide, you’ll find:

• A step-by-step checklist for choosing a US business structure
  
• Which visa should you use when entering the US
  
• What metrics to use to show you’re gaining momentum in the US
  
• Practical insights from founders who’ve already made the move
  

If this article helped you understand what US investors look for, the full guide will help you execute with confidence before, during, and after your raise.