Best Practices for Series B Fundraising

Carta reports that the median Series B round size in the 3rd quarter of 2023 was $15 million. If your startup is considering a Series B funding round, use these best practices to secure funding.

💰 Planning before raising funds
Investors expect businesses seeking Series B funding to have product-market fit and a go-to-market strategy. Ideally, founders should continue to develop new investor relationships after Series A funding and before Series B fundraising.

Founders should be able to answer these questions before reaching out to investors:

Use of funds
Why are you raising funds? Companies often need additional capital to ramp up sales and marketing, or to launch new products and services.

Deciding on terms
Startup firms must explain how funds will be used, and the time frame.

Assume, for example, that a founder determines that launching a new product line will require $12 million over six months. The founder evaluates the current cash balance, and the projected burn rate to project the firm’s cash needs.

The startup raises $14 million, so the firm has more cash available if the product launch requires more capital than originally planned.

📚 Create the pitch deck
Successful founders can tell a compelling story about the business and where the company is headed. Here are some components of an effective pitch deck.

The problem to be solved
How much discomfort does the problem create for individuals? A high level of discomfort will motivate people to take action and buy your product or service. If the problem is minor, people may not take action.

Your solution
How is your product different and more effective than the competition? A prospect should be able to compare your solution with the competition and see how your product is the best choice.

Progress to date
Document the progress you have made so far. Explain your market research, the product-market fit, and how prospects and customers respond to your go-to-market efforts. What have you learned, and how are you changing your business plan to adapt?

Fundraising purpose and goals
Investors must clearly understand how the fundraising round will move the business forward. What goal will you attempt to achieve with this round of funding?

Team overview
Explain each founder's background, the area of expertise, and any prior startup experience. Investors are looking for people with vision, and founders who can lead a team through rapid growth.

🤝 Partner with experts
Founders need outside experts who can provide objective advice as the business scales. Find experts who understand the challenges of managing a startup, including:

Cash flow management
Revenue recognition
Financial reporting

As the business grows, the decisions you make are more complex. Partner with experts with industry experience.