Accounting & Finance

Comparing Series A, B, C and D funding: Which is your business ready for?

  • 6 min Read
  • December 16, 2022

Author

Escalon

Table of Contents

As a small business owner or entrepreneur, you may be considering raising capital to help your business grow and thrive. One way to do this is by hosting venture capital fundraising rounds. 

These rounds provide outside investors with the opportunity to contribute to your company and in return, enjoy an ownership stake in the business, while you receive the capital you need to help your business expand.

Curious what each round of funding means, and how you can use Series A, B, C and D funding to raise capital for your small business? In this article, we’ll describe each of the four fundraising rounds and how they can contribute to the next stage of your business’s growth.

Schedule a call today

Series A funding is the first robust round of venture capital financing for startups


Before Series A funding, startups may go through a few seed rounds, though Series A funding generally brings in significantly more capital. Seed rounds, though helpful, are not required. 

That’s why Series A is often considered the first official round of fundraising. This fundraising round is typically used to finance the development of a product or service and to build the team needed to support the business’s growing momentum. 

Series A investors are venture capital firms, accelerators or angel investors who are looking for high-growth potential companies to invest in. Series A fundraising has increased greatly over the past decade. 

In 2010, the average Series A round raised $4.9 million. In 2017, that average jumped to $12.1 million! To raise capital through a Series A round, you will need to have a solid business plan, some level of early-stage success and a clear vision for the future of your company. 

You’ll also need to be able to demonstrate that your product or service has a market, and that there’s demand for it. These are just some of the best practices when pitching to investors

Series B funding is the second round of VC financing, for startups with proven potential


The second round of VC fundraising, Series B, is often used to finance the expansion of the business and to help it reach the next level of growth. At this stage, businesses may launch new products or enter new markets. 

By receiving additional funds from venture capitalists and other investors during this stage of growth, businesses are able to increase their sales and profits while minimizing associated risks. It’s also an ideal time to bring on strategic partners who can help the company reach its goals more quickly and effectively.

Talk to us about how Escalon’s FinOps services can help position your startup for investment.


Most Series B investors are venture capital firms, angel investors or strategic investors who are looking to invest in companies with proven track records of success — a few years of successful expansion with a strong leadership team and clear vision. That’s what makes this round particularly hard to reach. 

Investors have higher standards than ever, and every business that hopes to raise capital must prove its worth. To prepare for a Series B round, your business should have detailed reports describing your company’s success and growth, plus a straightforward plan for how this capital will be used to improve profitability. 

Series C funding brings in a new kind of investor— late-stage VC firms


Now that your business has shown it can manage capital effectively, expand into new markets, reach a strong customer base and maintain steady leadership, it’s time for the Series C round. This round is often leveraged to help the business scale and expand operations.

This high-ticket round, where ventures raised an average of $52 million in 2021, is typically led by late-stage venture capital firms. The main difference in this series is that businesses may be more focused on finding large institutional investors rather than angel or other early-stage venture capitalists. 

And unlike earlier rounds, where there might be more flexibility when negotiating terms with investors, in later rounds, companies can expect more complex negotiations as the venture matures and more stakeholders become involved in the decision-making process.

Series D is the least-common funding round


Many new business owners and entrepreneurs believe Series D is the final fundraising round, but in reality, startups can continue raising VC in Series E and beyond. But these later funding rounds are less common because by this point in their growth journey, businesses can choose to go public or pursue loans and other funding.

In Series D, companies may be raising capital to expand again before going for an IPO, or they may need additional funding because Series C did not raise enough capital to meet the business’s goals. 

At this stage, companies often bring in $100 million or more in funding — and may reach “unicorn” status in the process ($1 billion valuation for a private company).

Series A, B, C, and D aren’t the only way to raise capital, but they can be the most effective


Everybody loves a bootstrapping success story where the founder starts and expands a business with just their personal funds and revenue from the firm. 

But more commonly, securing external funding is an essential part of the growth and expansion of a small business. And these startup funding rounds allow founders to secure the capital they need to build and expand their operations so they can bring their big ideas to life. 

While the process of raising VC through funding rounds can be complicated and time-consuming, it can supply your business with the cash you need to reach the next stage — and beyond.

Want more? In addition to CFO services, taxes, and bookkeeping and accounting through its FinOps, Escalon’s Essential Business Services include PeopleOps (HR, benefits, recruiting and payroll) and Risk (business insurance). Talk to an expert today.

Schedule a call today

Talk to our team today to learn how Escalon can help take your company to the next level.

  • Expertise you can trust

    Our team is made up of seasoned professionals who bring years of industry experience to the table. You gain a trusted advisor who understands your business inside out.

  • Quality and consistency

    Say goodbye to the hassles of hiring, training and managing in-house finance teams. You will never have to worry about unexpected leave of absence or retraining new employees.

  • Scalability and Flexibility

    Whether you’re a small business or a global powerhouse, our solutions scale with your needs. We eliminate inefficiencies, reduce costs and help you focus on growing your business.

Contact Us Today!

Tap into the latest insights from experts in your industry

People Management & HR

The Role of HR Analytics in Strategic Decision-Making 

In the era of big data, human resources (HR) analytics has emerged as a powerful tool that can transform how...

Accounting & Finance

Understanding Customer Lifetime Value and Its Impact on Strategy 

In the world of business, not all customers are created equal. Some make one small purchase and disappear, while others...

Accounting & Finance

Tax Strategies for Succession Planning in Family-Owned Businesses 

Succession planning in a family-owned business is a delicate dance that involves not only leadership and emotional considerations, but also...

Accounting & Finance

The Role of Financial Modeling in Strategic Planning 

Financial modeling is a cornerstone of strategic business planning. It involves creating numerical representations of a company’s financial future, allowing...

Accounting & Finance

The Importance of Financial Literacy for Business Owners 

Running a business isn’t just about having a great product or service – it also requires a firm grasp of...

Accounting & Finance

Tax Implications of Remote Work: What SMBs Need to Know 

The rise of remote work has opened exciting possibilities for small and medium businesses – access to a wider talent...

Leadership & Growth

Succession Planning: Preparing for Leadership Transitions 

Change is inevitable in business, and one of the most significant changes a company can face is a leadership transition....

Accounting & Finance

Sales Tax Compliance in the Digital Age: Challenges and Solutions 

The rise of e-commerce and digital business models has revolutionized how companies reach customers, but it has also added new...

Leadership & Growth

Implementing Lean Management Principles in SMBs

“Lean management” might conjure images of big manufacturing plants fine-tuning assembly lines, but the principles of lean are highly relevant...