Series

Funding

Series Funding

Series funding is when a founder raises increasingly larger rounds of capital in order to keep their startup going. Founders usually start with seed funding, then move on to Series A, B, C, D, and even E. While each Series can included a combination of different types of funding, they almost always include equity capital, particularly in the later stages.

Occasionally, we could have a combination of equity and debt.


Series A
Startups are expected to have a plan for developing a business model, even if they haven’t proven it yet. They’re also expected to use the money raised to increase revenue. Because the investment is higher than the seed round— usually GHs200,00 to GHs1.5 million.

We are going to want more substance than required for the seed funding, before we commit.



Series B
Startups have already found their product/market fit and needs help expanding. A Series B round is usually between GHs1.5 million and GHs10 million. Companies can expect a valuation between GHs4 million and GHs40 million. Series B funding usually comes with 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 in order to insure that their piece of the pie is still significant.


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. For their Series C, startups typically raise an average of GHs16 million.

Valuation of Series C companies often falls between GHs40 million and GHs80 million, although it’s possible for companies to be worth much more, especially with the recent explosion of “unicorn” startups.


Series D
A series D round of funding is a little more complicated than the previous rounds. As mentioned, many companies finish raising money with their Series C. However, there are a few reasons a company may choose to raise a Series D. One is they’re looking to expand in a new way before going for an IPO. The other is a “down round,” which is when a company hasn’t hit the expectations laid out in their previous round.

Down rounds can devalue a startup’s stock and make it difficult to move forward. The amount raised and valuations vary widely, especially because so few startups reach this stage.



Series E
Fewer make it to a Series E. Companies that reach this point may be raising for many of the reasons listed in the Series D round: They’ve failed to meet expectations; they want to stay private longer; or they need a little more help before going public.