Series A, B, C Funding: Averages, Investors, Valuations
Table of Contents
- What is Series A Funding? Descriptions, Averages, Investors, How to Get Funded
- What is Series B Funding? Details, Averages, Investors
- What is Series C Funding? Details, Averages, Investors
- Seed Funding: Description, Averages, Investors
- How to Best Track New Funding Rounds
- Funding Rounds and the Startup Financing Cycle: How it Works [Video]
- Related Resources
What is Series A Funding?
Series A funding, (also known as Series A financing or Series A investment) is the first round of venture capital funding round for a startup. It is a form of equity based financing and and is considered early-stage funding.
Equity-based financing refers to a form of financing in which a company raises capital by issuing shares of ownership (stock) in the company to investors. The investors, in exchange for their investment, become shareholders of the company and are entitled to a portion of the profits and assets of the company proportional to their ownership.
This type of financing differs from debt financing, where a company borrows money and must repay the loan with interest. Equity-based financing is often used by startups and growing companies that do not yet have a proven track record and are unable to obtain debt financing.
Equity-based financing can come from a variety of sources, including angel investors, venture capital firms, and initial public offerings (IPOs).
The Series A funding round follows a startup company's seed round and precedes the Series B Funding round. "Series A" refers to the class of preferred stock sold.
Series A Funding Details:
Receiving a Series A round is an important milestone for startup companies. Aside from the funding being much larger than a seed round, companies need to demonstrate they have a minimum viable product (MVP) to acquire an A round - and not just a great idea or team. It is not easy for seed funded companies to graduate to a Series A funding round.
In fact, less than 10% of companies that raise a seed round are successful in then raising a Series A investment. A Series A investment provides venture capitalists, in exchange for capital, the first series of preferred stock after the common stock issued during the seed round. Generally speaking, a Series A financing provides up to a couple of years of runway for a startup to develop its products, team and begin to execute on its go-to-market strategy.
A major factor in a startup be able to raise an A round or even a seed round is the startup ecosystem surrounding it. Startup ecosystems refer to the network of organizations, institutions, and individuals that support the development and growth of startups. This includes venture capital firms, angel investors, accelerators, incubators, government agencies, universities, research institutions, service providers, and other stakeholders.
The startup ecosystem provides the necessary resources, infrastructure, and support systems that startups need to succeed, such as access to funding, mentorship, training, and market opportunities. The interconnectivity and interdependence of these various elements are what make up the overall startup ecosystem, which can vary greatly from one location to another.
A thriving startup ecosystem is typically characterized by a supportive culture, a strong network of mentors and advisors, a readily available pool of talent, and a strong culture of entrepreneurship and innovation.
Series A Funding: Average and Valuation
Average Series A Funding: 2023 (U.S. funding data, updated 5/29/2023)
• For January 1, 2023 through May 29th, 2023, the median Series A in the U.S. was $12 million, while the mean was $22 million. Outsized A rounds of $200 million & $270 million, from Cargo & Orbital Therapeutics, respectively, have had a significant impact on the mean.
Average Series A Funding: 2022
• The median Series A funding in 2022 was $15 million USD. The mean Series A funding in the U.S. was $17 million.
Average Series A, B, C Funding in U.S., 2022 (Source)
|Series A||$15 million||$22 million||650|
|Series B||$35 million||$51 million||385|
|Series C||$55 million||$76 million||168|
In the U.S., the number of Series A deals as well as the mean round size increased significantly in 2021. There were approximately 880 Series A deals in the U.S. in 2021, an increase of 35% over the 650 Series A deals in the U.S. in 2020. 2022 is on track to end with about the same number as in 2020. (Source)
• Average Series A Startup Valuation in 2022: Series A startups currently had a median pre-money valuation of around $50 million.
Series A Funding: Investors
While there are hundreds of venture capital firms in the U.S. alone (here is a listing of hundreds of VC firms), Some of the biggest Series A investors in software startups include Accel, 500 Startups, Bessemer Venture Partners, Andreessen Horowitz and Greycroft Partners.
A list of the most active Series A round, early stage investors also includes:
• IDG Capital
• New Enterprise Associates
• Sequoia Capital China
• Y Combinator
• Sequoia Capital
• Matrix Partners China
• Intel Capital
• Index Ventures
• Google Ventures
Pitchbook also cites these organizations as the most active investors in European Series A investments:
1. Idinvest Partners
2. High-Tech Gründerfonds
3. Octopus Ventures
4. Index Ventures
5. Partech Partners
How to Get Series A Funding:
1. Join an Accelerator
Approximately one-third of startups that raise Series A funding go through an accelerator and the top 3 accelerators account for 10% of all Series A rounds. The #1 factor evaluated for acceptance into leading accelerators is your team.
2. Leverage Your Network
When fundraising, your network is critical. While joining a top-tier accelerator gives you the best statistical chance for success in ultimately getting a Series A funding, these groups only accept about 2% of applicants. Startups that successfully raised a Series A without going this route often did so by networking early and often with influential investors, whether they are Angel Investors or VCs from leading venture capital firms.
3. Extend and Nurture Your Network
Continue to nurture and leverage angel and micro-VC connections before even thinking of pitching them. Take As many new meetings as You can. Building and nurturing genuine relationships before starting the Series A tour can dramatically improve your odds.
What is Series B Funding?
Series B funding, (also known as Series B financing or Series B investment) is the second round of venture capital financing for a startup. The Series B funding round follows a startup company's A round and precedes the Series C Funding round. "Series B" refers to the class of preferred stock sold.
Series B Funding Details:
Series A vs. Series B. While a Series A funding round is to really get the team and product developed, a Series B Funding round is all about taking the business to the next level, past the development stage. Tomasz Tunguz, a well known Venture Capitalist at Redpoint, says a Series B funding is the most challenging round for a startup company, so be prepared before you present your pitch.
Typically before this funding series can occur, the company has to have shown some strong achievements after its Series A round. Series B is therefore to pour the gas on for growth with a larger investment round.
Series B Funding: Average and Valuation
• Average Series B Funding (U.S. funding data): As of 11/23/22, median Series B funding in 2022 since January 1st is $35 million USD. The mean Series B funding in the U.S. is $48 million. (Source)
• Average Series B Startup Valuation in 2021: In 2021, Series B startups have a median pre-money valuation of around $40 million.
Series B Funding: Investors
A list of some of the top Series B investors includes:
• Google Ventures
• New Enterprise Associates
• Kleiner Perkins Caufield & Byers
• Khosla Ventures
• General Catalyst Partners
What is Series C Funding?
Series C funding, (also known as Series C financing or Series C investment) means the third venture capital funding for a startup. The Series C funding round follows a startup company's B round and precedes the Series D Funding round, if necessary. "Series C" refers to the class of preferred stock sold.
Series C Funding Details:
A Series C Funding Round generally occurs to to make the startup appealing for acquisition or to support a public offering. If you are wondering what series is usually the last, a company will most often end its external equity funding with Series C. This is the first of what are also called "later-stage" investments. This can continue into Series D funding, Series E funding, Series F funding, Series G funding, private equity funding rounds, etc. While there is a lot of capital ready, a lot of companies don't even make it to Series C. The reason for this is because before investors venture to participate in this round, Series C investors are looking for breakout companies that have already demonstrated significant traction. Thus, the deal size of Series C funding rounds has continued to increase.
Series C Funding: Average and Valuation
• Average Series C Funding (U.S. funding data): As of 11/23/22, median Series C funding in 2022 since January 1st is $55 million USD. The mean Series C funding in the U.S. is $72 million. (Source)
• Average Series C Startup Valuation: The median pre-money valuation of a startup receiving a Series C funding is currently around $68 million.
Series C Funding: Investors
Some of the most common investors in Series C funding include late-stage VCs, private equity firms, hedge funds and banks.
Seed Funding: Description
Seed funding is usually the first step in the capital raising process. This is the initial investment in a startup company in exchange for equity/partial ownership of the company. Seed funding can come from a variety of sources, such as friends and family, Angel Investors, Crowdfunding and startup accelerators. The reason for seed money is to help startup founders test an idea to see if they can demonstrate some product/market fit. To get seed funding, it is really about networking as well as selling the dream and team. Seed funding varies widely from just tens of thousands of dollars to up to around $10 million. The equity given up in exchange for the seed funding is generally in the range of 10% - 25%.
Seed Funding: Average and Valuation
• Average Seed Funding Amount in 2020: $2.2 million.
• Average Seed Funding Startup Valuation: The pre-money valuation of a startup receiving seed funding is currently around $6 million.
Seed Funding: Investors
Some major sources of seed investors (beyond friends and family) include:
1. Angel Investors
2. Accelerators like YCombinator and TechStars
4. Seed Funds from large corporations such as Intel, Google and FedEx, offer seed funding to promising startups working on innovative technologies which might be good acquisition candidates later.
A list of of the most active seed investors includes:
4. Innovation Works
5. 500 Startups
6. Innova Memphis
7. Entrepreneurs Roundtable
8. Berkeley SkyDeck Fund
9. Quake Capital Partners
How to Best Track New Funding Rounds
With a Fundz account, you get real-time updates of companies that have announced new funding, an acquisition or are seeking funding via crowdfunding. Fundz also integrates executive contact and company data. Pro customers can also exports to CSV (sample) and can see real-time trends data on the top worldwide locations and industries currently receiving funding, with number of deals and total investment per industry and top location. Get started for just $19/month.
Funding Rounds and the Startup Financing Cycle: How it Works [Video]
Regulation Considerations When Raising Startup Funding
What is a Series A Funding Term Sheet?
1. Proprietary data supplied by Fundz
2."One-third of U.S. startups that raised a Series A in 2015 went through an accelerator." - Pitchbook
3."The Top 3 Startup Accelerators Produce Nearly 10% of U.S. Series A Deals." - Mattermark
4."Overcoming The Odds: 10 Tips For Getting Into A Top Accelerator." - OnStartups.co
5."7 key things you need to know about an accelerator like Techstars." - VentureBeat