Make Your Series B Funding Round Online

Introduction:- 

When the question arises regarding the funding for startups, one of the least considered stages is the B Series Funding. It is largely believed that, once a business secured Series and Seed A'' funding, then ultimately series B Funding will follow it. However, it is to be noted that it may be the same in most cases. In fact, it may sometimes be difficult to secure Series B Funding out of all the rounds of investment.

What is Series B Funding?

Series B Funding is also known as series B round or series B financing. It is one of the processes in the process of raising the capital of a startup. Necessarily, the series B round is regarded as the third stage of the startup funding and the second stage of startup funding is venture capital funding.

 How Does Series B Funding Work?

A series B funding is a type of funding based on equity as that of previous stages of funding that included series and seed A funding. In simple words, the investors invest capital in a company in exchange for preferred shares of the company. In such cases, the majority of the deals include anti-dilution guidelines such as in a series of A rounds. This simply means that generally, the company will sell the preference shares that will not provide its holders the right to vote. However, the shares have the option, that it can be convertible i.e. the preference shares can convert into equity shares at a future date.

Series B funding is good for companies that are at the stage of development. These are the companies that can generate stable profits and earn good revenue. Apart from that, these companies usually come with good valuations having more than $10 million.

B series funding proceeds are mainly used to support the growth of the company to a higher level. Various ways can be adopted to raise the capital including marketing, talent acquisition, sales, and development of new technologies.

 Participants in Series B Funding:-

Generally, the key players are the same in both A and B series funding. Some of the investors who invested in the previous funding stages may also be interested to increase their holding in the company. In the meantime, the prospective new investors may also the financing round. Commonly, the new investors include venture capital firms that have specialization in investment in later-stage organizations and also some private equity funds.

The Investors from the last stages of funding can also help to attract more new investors into the company. Apart from that, introducing new methods of funding including online equity crowdfunding portals makes the process democratized.  For instance, with the introduction of crowdfunding platforms, the general public can participate in the Series B funding.

It is to be noted that new investors usually buy the shares at a higher price than the existing investors who have already invested their money in previous funding stages. Hence, the return will be lower. However, the risk of losing the investment will also be lower.

Why is the Series B Funding Different? 

Primarily, the Seed funding is based on the vision and idea of the founder of this funding process. By the time, a person reaches the series A round, the parameter of critical analysis are considered as a tested idea, evidence bases of product-market fit, and core team. However, with the help of B series funding each parameter will be supported by effective evidence.  It will be no longer about ideal assumptions or positive assertions. There are some of the essential parameters for series B funding exist that are scalability and repeatability.

Why is the Series B Funding Difficult?

One of the challenging parts of B series Funding is the business cycle. Provided the company may have reached the stage, where the investors would like to see how the assumptions before reality can turn into. Investors are also keen to see the working revenue model actually generating some good revenue. The existing revenue earned, May not be huge but it should be some good earnings. One must keep that in mind before taking an investment decision. Thus, Series B funding can be difficult at certain times.

Why are Investors not too Keen on Series B Round?

When someone is seeking Series B Funding, then it is implied that the business is in the grey area.  Here, the startup owner is not looking for a Seed fund, where investors can get equality at a high rate for a small investment. Apart from that, the investors are already investing in other things and working. A venture capitalist will usually want to wait and see if things will work out as planned and accordingly will invest more in upcoming rounds.  It is to be noted that Series B Funding is a danger zone for both companies as well as the investor. In order to secure a B series funding, an approach with a comprehensive business plan based on market research is required and presented to the investors.

Create an Investor Pipeline:-

As discussed earlier, it can be seen that Series B funding is one of the challenging and crucial rounds of investment. Thus, before starting the funding process, one needs to create a competitive environment. It is advisable that a meeting must be fixed with the investors at least six months in advance so that a healthy relationship can be built. This will make sure that at the time of raising the capital, the startup owner will have multiple offers and that he is not needed to settle in one offer.

It is important to get the research done about the potential investors and shortlist their portfolios to find out the best suitable investor for the company, just like the series A funding. A venture capitalist will usually want to wait and see if things will work out as planned and accordingly will invest more in upcoming rounds.  B Series funding must be planned in advance.