Series funding: how to navigate Series A, B & C funding rounds

If you’re looking to launch your startup or are in the early stages of establishing your business, you’ll likely have a long-term vision for significant growth. And that kind of growth needs investment.

Nowadays, there are many avenues you can take to raise finance for your business, and for a lot of companies, this is through Series A, B and C funding.

Whether you’re new to the business world or are considering series funding yourself, this guide will explain everything you need to know. We’ll explore the key aspects of each funding round, the benefits and drawbacks to consider, and tips on how to secure series funding to get your business off the ground.

What is Series A/B/C funding?

The term “series funding” refers to a multi-round process where startups raise capital from external investors.

As you might have already guessed, series funding is primarily split into three main funding rounds – A, B and C. But what does each round entail, and how are they different from each other?

Series A funding

• Funding amount: approximately £1m-£15m
• Equity stake from investors: approximately 20-25%
• Length: 12-18 months

Series A funding is the first official round of investment from venture capitalists or other financial firms that specialise in backing startups.

The main purpose of this round is to help advance a business’s growth, intending to expand the team, develop products/services, further scale operations, and boost sales and marketing efforts. To reach this stage, a business will typically need:

• A solid business plan
• A minimum viable product (MVP)
• A data-backed pitch deck and strategic growth plan
• A scalable business model
• Proof of significant milestones (such as market viability, early traction or a strong team)

Series B funding

• Funding amount: approximately £10m-£50m
• Equity stake from investors: approximately 10-20%
• Length: 3-18 months

The second major round of funding which typically comes after a successful Series A round. At this stage, a business has found its product/market fit and needs help to expand further. This includes growing the team by hiring specialised talent and improving product/service offerings or capabilities.

The typical criteria for Series B funding include:

• An annual recurring revenue (ARR) of around $5m-$10m
• A growth rate of around 15-20% month-over-month
• Proof of a strong market position

Series C funding

• Funding amount: approximately £30m+
• Equity stake from investors: approximately 10-20%
• Length: 3-4 months

Series C funding is for companies that aim to expand to international markets, acquire other businesses or develop new products. Additionally, they may seek Series C funding to increase their business valuation before an initial public offering (IPO) or an acquisition.

Series C funding isn’t easy to come by, as only 18% of VC funding for UK businesses goes to Series C and beyond. There’s a tough criteria to meet, including:

• Proof of high revenue
• Evidence of healthy profits, or high potential for profit
• Growing EBITDA (earnings before interest, tax, depreciation and amortisation)
• An established customer base
• A significant share of the market

Advantages and disadvantages of Series A/B/C funding

Startups and early-stage businesses pursue series funding because not only does it give them access to capital, but also helps increase visibility among potential customers, employees, partners and future investors.

That being said, it doesn’t come without its drawbacks. Here’s a quick breakdown of series funding to help you see the bigger picture.

✅ The pros of Series A/B/C funding

• Access to capital: provides the cash that businesses need to build, grow and scale effectively
• Boosts credibility: can attract talent, partners and even media attention (especially if the investor is well-known)
• Strategic support: investors also offer valuable guidance, mentorship and connection
• Faster growth: businesses can move much quicker with investor funding than they would through bootstrapping

❌ The cons of Series A/B/C funding

• Equity dilution: giving an equity stake to investors means giving up complete ownership of your business
• Pressure to perform: businesses are expected to meet high targets, achieve milestones and deliver ROI within a relatively short period
• Loss of independence: major VC investors often require board seats or rights on key decisions, which can reduce your freedom as a founder
• Risk of misalignment: the goals of investors and founders may not always align (for example, exit timelines or growth strategies), which can lead to tension

How to prepare for funding rounds

To get series funding, you can’t just jump in with little more than a business idea. Investors want to know why your business is worth investing in, what it brings to the table and how it fits in with the market. There’ll be a lot you need to prepare for, so we’ve broken down some key practices to help you get started.

1. Know your metrics

Numbers are important in business, and investors will want to see that you’re tracking the right ones. Depending on your business model, this could include:

• Revenue and growth rate
• Customer acquisition cost (CAC)
• Lifetime value (LTV)
• Churn rate
• Active users or engagement

These numbers are important as they show that you’re tracking performance, learning from your data, and making smart decisions. Moreover, investors want to see how you interpret these numbers and what actions you’re taking as a result.

2. Build a strong pitch deck

As mentioned earlier, this needs to be a 10- to 20-slide presentation that details what your business is about. It should walk investors through:

• The problem your business aims to solve
• How your product/service will solve the problem
• The size of your target market
• Your competition
• Further details of your product/service
• The business and revenue model
• The people behind your team
• Financial information (including profit and loss details, a balance sheet and potential earnings)
• Current status, use of funds and exit strategy

Make sure to practice your pitch as well. You’ll need to explain your business clearly and confidently. Be prepared for tough questions about your market, metrics, competition and team. Doing mock pitches with mentors or fellow founders from your network can help you fine-tune your pitch delivery.

Ready to be pitch perfect? Make sure to check out our guides on how to create a pitch deck and how to write an elevator pitch.

3. Clean up your cap table

A cap table (short for capitalisation table) is a spreadsheet or table that outlines who has ownership in your company. It should demonstrate who owns what percentage of the business, the types of securities they have (for example, shares, options or warrants) and the value of those shares.

Investors are very likely to request a cap table as part of their due diligence process. Therefore, you should provide a clear, up-to-date version that clearly shows investors what their share will look like if they invest in the company.

If your cap table is messy or unclear, it can slow things down or even scare investors off.

4. Have a data room ready

A data room is a secure space (either physical or virtual) that stores sensitive business documents and confidential information, such as financial statements, user metrics, legal contracts, your cap table and your product/service roadmap.

Having a data room ready in advance can help speed up the fundraising process as investors won’t need to keep asking you for files. It also shows professionalism and proves to investors that you’re organised and prepared, and are being genuine about how your business operates.

What happens after Series C funding?

Once a business goes beyond Series C, it typically means that it has garnered a significant amount of money and success. However, there are still some avenues that can be taken to secure additional capital, including:

• IPOs: this is when a business offers its shares to the public for the first time on a stock exchange, allowing it to raise capital from new investors
• Acquisition: the business is purchased by a larger company, which can help it grow further, gain new technology and enter new markets
• Additional series funding: while Series C is often the final funding round for businesses, others may go on to raise funding through Series D, E and beyond

Conclusion

Series A/B/C funding can offer startups the capital, connections and credibility they need to scale quickly and reach ambitious goals. 

However, it’s not a one-size-fits-all solution, as each round brings new expectations, greater scrutiny and less control over your business. So, before jumping in, make sure your business is ready, your numbers make sense, and you’re clear on what you want out of the deal.

That being said, if you’re confident in your business’s growth potential, have a strong team behind you and are ready to meet investor demands, series funding could be just what your business needs to accelerate to growth.