Series Funding for startups in India – what does it mean?

Updated: Oct 9, 2021

There are multiple funding options available for startups in India, such as seed funding, series funding, angel investors, venture capital etc.

Here, I have attempted to explain Series Funding.

Series Funding

Series funding is when a startup raises rounds of funds, each one higher than the next and each one increasing the value of the business. It’s described alphabetically: Series A, B, C, D, and E.

Series A

Once a startup makes it through the seed stage and they have traction — whether it’s number of users, revenue, views, or any other key performance indicator (KPI) — they’re ready to raise a Series A round.

The typical valuation for a company raising a seed round is $10 million to $15 million.

Series A funding usually comes from venture capital firms, although angel investors may also be involved.

Series B

A startup that reaches the point where they’re ready to raise a Series B round has already found their product/market fit and needs help expanding.

Points to consider here are: Can you make your company work at scale? Can you go from 100 users to a 1,000? How about 1 million?

A Series B round is usually between at a higher bracket than Series A round. Companies can expect a valuation between $30 million and $60 million.

Series B funding usually comes from venture capital firms, often the same investors who led the previous round. Because each round comes with a new valuation for the startup, previous investors often choose to reinvest to ensure that their piece of the pie is still significant.

Companies at this stage may also attract the interest of venture capital firms that invest in late-stage startups.

Series C

Companies that make it to the Series C stage of funding are doing very well and are ready to expand to new markets, acquire other businesses, or develop new products.

Series C is often the last round that a company raises, though there are few cases of Series D or E. However, it’s more common that a Series C round is the final push to prepare a company for its IPO or an acquisition.

Valuation of Series C companies often falls between $100 million and $120 million, although it’s possible for companies to be worth much more, especially with the recent explosion of “unicorn” startups.

Valuation at this stage is based on hard data points, like:

  • How many customers does the company have?

  • How much revenue has the company generated?

  • What is the company's current and projected growth rate?

Series C funding typically comes from venture capital firms that invest in late-stage startups, private equity firms, banks, and even hedge funds.

Series D

Many companies finish raising capital during a Series C. However, there are a few reasons a company may choose to continue on to Series D.

1. Expansion Opportunities: Before opting to go IPO, a company might discover a new opportunity for expansion and just need another boost to get there. Many companies raise Series D rounds (or beyond) to increase their value before going public.

Alternatively, some companies want to stay private for longer time.

2. Down Round: When a company hasn’t hit the expectations laid out after raising their Series C it's called a “down round." It also refers to when a company raises money at a lower valuation than they raised in their previous round.

Series D rounds are typically funded by venture capital firms. The amount raised and valuations vary widely, especially because so few startups reach this stage.

Series E

If few companies make it to Series D, even fewer make it to a Series E. Companies that reach this point often raise for many of the reasons listed in the Series D round:

  • They’ve failed to meet expectations

  • They want to stay private longer

  • They need a little more help before going public

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