Series B
A Series B is the venture round raised to scale a business that has already proved itself at Series A — to build the sales organisation, enter new markets and, in fintech, to fund the capital and compliance that a licence at scale demands. It is priced on metrics rather than promise, led by larger funds, and it is the round at which the rights granted at Series A are tested.
- Also known as
- Series B round, B round
- Used at
- typically 18–30 months after Series A, at several million of recurring revenue and a growth rate the new investor can underwrite
- Binding
- yes — a new class of preferred shares, senior to or alongside the Series A, with the same family of rights
- Typical size
- $20–60m; larger for fintechs whose growth consumes regulatory capital, lending capital or float
- Typical valuation
- pre-money of $80–250m; a step-up of 2–3× on the Series A post-money in a normal market, less than 1× in a down round
- Parties
- a new lead investor, the Series A lead following on, founders and the enlarged board
How a Series B works in practice
The Series B investor is buying a plan with evidence. Where the Series A lead backed a team and early traction, the B lead reads two years of cohort data — retention, payback on acquisition spend, gross margin by product — and prices the company on where those numbers say it will be in three years. The diligence is longer, the data room deeper, and the questions about the fintech's regulatory position sharper: what capital the licence requires at the planned volume, whether the partner bank will still be there, what the regulator said at its last visit.
The structural questions are about the stack. The new preferred shares usually rank pari passu with the Series A, sometimes senior; the existing anti-dilution protection matters only if the B is priced below the A, which in a down round it is, and then the Series A holders receive extra shares at the founders' expense. Pro-rata rights from earlier rounds decide how much of the B the new lead can actually buy. Founders who negotiated well at the A find the B follows its template; those who did not find the B lead insisting on repairs.
For a fintech, the Series B often funds the balance sheet as much as the business: regulatory capital for a licence, a first-loss piece for a lending facility, or the float that a payments licence requires the company to safeguard.
Example
A payments company with £6m of revenue growing 90% a year raises a £30m Series B at a £120m pre-money — £150m post, 20% to the round. The Series A investor, which paid £48m post-money two years earlier, sees a 3.1× step-up and takes £5m pro rata; a growth fund leads with £25m and takes a board seat. £8m of the round is earmarked for own funds under the company's e-money licence, whose requirement will reach £6m at the planned float, and £4m for a first-loss piece on a £40m lending facility. The remaining £18m funds two years of expansion. The new preferred ranks alongside the A at 1× non-participating, and the founders' combined stake falls from 54% to 43%.
Common mistakes
- Raising the B on the plan rather than on the cohorts, and being told to come back in a year. - Forgetting that the licence's capital requirement grows with the volume the round is meant to create. - Accepting a senior preference for the B that puts the Series A investors — the founders' allies — behind it. - A step-up so high that the C will have to be flat or down. - Letting the B lead's board seat tip the board to an investor majority.