BrainWave Catalysts
Where is your startup today?
A plain-language guide to startup stages
Investors, grant programs and lenders across Canada and the US describe startups with two scales. Here is what each one means, in plain language, with links to official sources.
Funding stages name the round you are raising: pre-seed, seed, Series A and beyond.
Readiness levels measure how mature your company is: technology (TRL), manufacturing (MRL) and commercial readiness.
01
Pre-seed
The first outside money, often used to turn an idea into a working product.
Who invests: founders, friends and family, angels, accelerators and micro-VC funds
They expect: a strong team, a validated problem and an early MVP or pilot users
Usual instrument: SAFE or convertible note
02
Seed
Funding to gain early traction and start selling.
Who invests: angels, angel groups and seed funds
They expect: first paying customers, retention and letters of intent
Usual instrument: SAFE, convertible note or a priced round
03
Series A
The first priced venture round, used to grow and build product/market fit.
Who invests: venture capital funds
They expect: clear product/market fit, repeatable revenue growth and sound unit economics
Usual instrument: preferred shares
04
Series B
Capital to scale what already works.
Who invests: growth-stage VCs and corporate venture arms
They expect: scaling sales, strong retention and expansion into new markets
Usual instrument: preferred shares
05
Series C and later
Late-stage rounds for market leadership, acquisitions or the run-up to an exit.
Who invests: late-stage VCs, private equity and crossover funds
They expect: a large revenue base, a path to profitability and an exit route
Bridge rounds: at any stage, existing investors may add short-term money to reach the next round's milestones, usually as a convertible note or SAFE
06
Exit
Investors get their return when the company is acquired or lists on a stock exchange (IPO).
Who buys: strategic acquirers, or public-market investors
They expect: audited financials, strong governance and predictable growth
1–3
Research (TRL 1–3)
TRL 1 – Basic principles observed: a scientific idea; paper studies only.
TRL 2 – Concept formulated: the invention is described; uses are still speculative.
TRL 3 – Proof of concept: lab work proves the key function works.
4–6
Development (TRL 4–6)
TRL 4 – Validated in the lab: basic parts tested together.
TRL 5 – Validated in a relevant setting: integrated parts tested in a simulated real environment.
TRL 6 – Prototype demonstrated: a working prototype tested in a realistic setting.
7–9
Deployment (TRL 7–9)
TRL 7 – Operational demo: a near-final prototype shown in actual use.
TRL 8 – Qualified: the final product proven under expected conditions.
TRL 9 – Proven in use: the product is in real use by customers.
Official definitions: Government of Canada (ISED) and NASA.
Manufacturing and commercial readiness
The other scales investors and lenders use beside TRL.
Manufacturing Readiness Level (MRL 1–10)
Whether a physical product can be made reliably at volume. It comes from the US Department of Defense and applies to hardware only.
- MRL 1–3: manufacturing concepts identified and tested in the lab
- MRL 4–6: prototype parts and systems built with near-real tooling
- MRL 7–8: design nearly final; pilot production line proven
- MRL 9–10: low-rate, then full-rate production
Commercial readiness (CRI 1–6)
How ready your market, customers and financing are. The Commercial Readiness Index is used beside TRL.
- CRI 1: hypothetical proposition; no commercial data yet
- CRI 2: small commercial trial; first pilot customers
- CRI 3: commercial scale-up; lenders start to engage
- CRI 4: several commercial deployments
- CRI 5–6: market competition, then a mature, bankable market
How the scales line up
A rule of thumb, not a standard: a software company may reach TRL 9 at seed, while a medical device may raise Series A at TRL 5.
- Pre-seed: TRL 2–4 · MRL 1–3 · CRI 1
- Seed: TRL 4–6 · MRL 3–5 · CRI 1–2
- Series A: TRL 6–8 · MRL 5–7 · CRI 2–3
- Series B and later: TRL 8–9 · MRL 8–10 · CRI 3–5
Sources: DoD MRL Deskbook (summary) and Commercial Readiness Index (ARENA).
Grants, tax credits and loans
Non-dilutive funding in Canada and the US.
Money that does not cost you equity. Each program suits a different readiness level.
Canada
- NRC IRAP: contributions and advice for R&D at incorporated businesses with up to 500 employees
- SR&ED: federal tax credit that refunds part of eligible R&D spending
- Innovative Solutions Canada: the government tests and buys innovations, placed by TRL
- BDC: business loans, advice and a Seed Fund for early-stage companies
United States
- SBIR / STTR: federal R&D awards in phases: feasibility, prototype, then commercialization
- R&D payroll tax credit: lets pre-profit startups apply the R&D credit against payroll tax
- SBA 7(a) loans: bank loans partly guaranteed by the Small Business Administration
Program rules and amounts change, so always check the official page before you apply.
Not sure where you stand? Our Investor Readiness Assessment scores your company on all three scales. Contact us to book a free 30-minute call.