In the Venture Capital (VC) sphere, "rounds" are commonly referred to when speaking about companies and their capital raising in relation to their development stage, and likewise what type of investments a VC-fund does. As a reference for new founders, I've put together a few slides which I hope can give some clarification into the subject.
Typically the rounds refer to the investment rounds a company looks to raise, and the type of investments (or risk acceptance) a VC-investor works with in pursuit of developing high potential investment opportunities into highly-valuable businesses. The rounds themselves relate to the development stage of a company and the goals with the raised investment capital. Each development stage typically has its own set of goals and challenges as a new company sets out to build, launch, establish and scale its business. A way to think of the rounds is to compare them to a stairway, where each upward step equals a higher and more refined (bigger, better, and more established) business that needs to be financed to reach its next step up to the top where the opportunity for a potential IPO is.
What is important to know is that the height of each step on this "stairway" differs in terms of goals, capital requirements, risks, and type of investors. Typically a new business is funded by its founders carrying the risks and financing to transform their idea into a prototype or an early version of their product that they can sell on the market. The longer the founder(s) can finance their works, the better off they are in terms of demonstrating that the product is viable for outside investments and for keeping a larger share in their business. Also, not all companies make it all the way up the stairs from the lowest step to the highest. In fact, very few do, and of those that do, less than 1% make it all the way to ultimately become a Unicorn.
The hurdles going from one round to the next tends to be high, and with a runway of 18-24 months per round, the pressure is high for a company, its management and team to successfully evolve their business to qualify for the next round. This also explains why at the end of the day there are just a few companies that manage to make it past one or two rounds. A business starting at Pre-Seed and Seed-level tends to be a very different one compared to what it needs to be to qualify for B, C and other late stage rounds. Please notice in the graph below that only 30 out of the starting 1 119 companies made it to the 6th Round. Although the 6th round is not the ultimate goal, the graph serves to illustrate how just a few companies successfully make it going from one round to the next.