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Series B Fundraising functions as one of the capital-raising stages of a business startup.
This occurs during the third stage of a startup’s fundraising or as the second round of financing when concerning venture capital financing.
When concerning business startups, Series B Fundraising occurs after the seed and Series A Fundraising and is categorized as equity-based financing.
This means that investors exchange capital to a company in exchange for preferred shares.
Similar to Series A Fundraising, Series B Fundraising generally includes anti-dilution provisions.
In doing so, shareholders of preferred shares do not possess voting rights although occasionally some preferred shares come with the ability to later be converted into common stock.
Understanding Series B Fundraising
Series B Fundraising occurs when companies arrive at their development stage, which means not only is the company yielding consistent revenues but accruing profits.
Generally, companies in the development stage come in with valuations exceeding $10 million.
The capital generated through the series B round can be used in a multitude of ways such as talent acquisition, technological integrations and developments, sales, and marketing.
As a whole, they are utilized in a capacity to support the company’s growth to the following stage.
Previous investors from Series A Fundraising will invest more with a company should they desire an increased stake in the company.
However, the core backers of Series B Fundraising include private equity firms along with venture capital firms.
Online crowdfunding platforms allow the public to participate in Series B Fundraising while given the increased value in the startup over time it is only natural that the share prices have appreciated with the company’s growth.