Series B Funding
/ˈsɪəriːz biː ˈfʌndɪŋ/
Series B funding is the third major round of venture capital investment that established startups raise to accelerate growth and market expansion after demonstrating product-market fit.
Series B funding is the third major round of venture capital investment that established startups raise to accelerate growth and market expansion after demonstrating product-market fit.
Series B funding represents a critical growth stage where companies typically raise between £10-50 million from institutional investors.
At this point, your startup has moved beyond proving concept and is focused on scaling proven business models to capture larger market share.
Companies typically seek Series B funding 12-24 months after their Series A round, once they've demonstrated consistent revenue growth and clear market traction.
Your business should have refined operations, proven unit economics, and identified specific expansion opportunities that require significant capital investment.
Series B funding involves larger investment amounts, more rigorous due diligence processes, and greater investor expectations for revenue growth and market position.
Unlike earlier rounds focused on product development, Series B investors expect demonstrated business model validation and clear paths to profitability.
Series B funding investors prioritise companies showing strong revenue growth, expanding customer bases, and competitive market positioning.
They evaluate management team capability, operational efficiency, and scalable business models that can generate substantial returns within their investment timeframes.
Series B funding rounds typically involve selling 15-25% equity stakes to new investors, which dilutes existing shareholder ownership.
However, the significant capital injection should accelerate company growth sufficiently to increase overall company valuation, benefiting all stakeholders despite reduced ownership percentages.
Series B funding rounds often include liquidation preferences, board representation rights, and anti-dilution provisions favouring investors.
These terms become more investor-friendly compared to earlier rounds, reflecting reduced company risk and increased investor leverage in negotiations.
Following Series B funding, companies focus on aggressive scaling, market expansion, and operational optimisation.
Management teams typically hire senior executives, expand sales and marketing efforts, and prepare for potential Series C rounds or exit strategies within 2-4 years.
