Introduction

While 90% of startups fail, the chance of failure drops dramatically for the select few that can successfully raise Series B funding.

According to CodeVentures, the chance of failure drops to 1% for the startups that can make it past Series B.

But what is Series B funding anyway, and how can startups improve their odds at making it to this stage and beyond?

Follow this guide to learn everything you need to know about Series B funding, including what it is, how long it takes, how much money you could raise, and how to wow investors with a strong pitch deck.

What is Series B funding?

Series B funding is the second round of series funding for startups. This round follows Series A funding and is meant to fund startups with proven traction and a clear path to sustainable scaling.

Series B funding can help startups go beyond the earlier stages of establishing the business and into a phase of increasing revenue and even turning a profit. Series B funding averages around $27M, and startup valuations reach a median of $117M at this stage of funding.

Is it hard to get Series B funding?

Yes, it can be hard to get Series B funding if you don’t properly prepare.

The time it takes to move from Series A to Series B is increasing, with the average time to get from A to B increasing to 31 months as of 2024.

But the forecast isn’t all cloudy. According to the HubSpot for Startups Hypergrowth Startups Index, Series B and C rounds are actually experiencing the most growth compared to pre-seed, seed, and other rounds of funding.

The amount of capital invested per deal also increased dramatically from 2023 to 2024. So, while you may need more patience between rounds, it seems that investors are ready to invest higher amounts in startups at these later growth stages.

For startups with truly disruptive ideas, or those pursuing the fastest-growing industry of AI, you may not need to wait long, anyway.

Companies like xAI and Figure, both in the AI space, recently closed Series B rounds of hundreds of millions of dollars, all in less than one year since their previous successful funding rounds.

How much funding will you raise at Series B?

Although the average amount of funding that startups raise in Series B is around $27M, the actual number your startup should pursue will depend on your growth and needs.

Calculate how much money you need to reach the next milestone of your business, whether that’s expanding to a new market or launching your next product.

Take your burn rate into account, how much money is in your current runway, and how much you’d like to stretch your runway for after Series B. These factors, and some key metrics we’ll touch on below, will all help you determine the amount of funding you should raise in a Series B round.

How long does Series B funding last? 

How much funding a startup raised in a Series B round and how long that funding will last vary based on the number of investors and business needs.

Generally, Series B funding will propel the startup through growth for another 12 to 24 months, and the startup can prepare for Series C funding in the meantime.

However, keep in mind that the amount of time it takes to fundraise is increasing. Recent data reveals that the median time it takes to go from a successful Series B round to Series C has increased to 856 days, or about 28 months.

Guide to successful Series B funding

Now that you know what Series B funding is, it’s time to figure out how your startup can earn investments in this highly competitive round.

1. Assessing capital needs

How much money do you need to take your startup to the next level? When you’re pursuing Series B, the goal isn’t to acquire more money to keep your startup afloat. At this stage, you should have clearly defined growth objectives and a number in mind for how much money it will take to reach those goals.

Whether you want to hire sales and customer service reps, expand into new markets, or enhance product development, it’s important to calculate how much capital it takes to achieve these targets. 

After coming up with a number that represents how much money you need to meet that next goal and bridge the gap to the next funding round, make sure to increase the amount to cover an additional 6 to 24 months as a buffer.

Extra capital from Series B could help in case of funding delays or other unexpected events, such as a pandemic or tariffs that disrupt the market.

2. Financial planning

In addition to determining the amount of money you need to meet milestones for growth, you also need to plan out how far that money could take you.

How far your money will go is known as runway, and to calculate it, you can divide the amount of money you have (or are asking for) by your burn rate (how much you spend per month).

The result will give you the number of months your cash reserves (or the investment amount you ask for) will last based on the given burn rate. Make sure to increase the burn rate if you expect operation costs to increase while scaling.

 

Creating data-driven runway estimates and financial forecasts based on current operations and projected growth will help prove to investors that any investments have a clear-cut purpose. When the startup shows exactly how the investment funding will pan out and drive growth, investors are more likely to give the green light.

3. Optimal timing and preparation

Timing the market isn’t easy. One major challenge to fundraising is trying to avoid any market disruptions when you’re preparing a pitch. However, there are ways to future-proof your business and impress investors.

Keep your thumb on the pulse of your industry and markets. If the market is facing challenges or there’s a disruption to your industry, consider ways to either strengthen your case for funding — such as by proving consistent growth and traction amid turbulence — or consider how to stretch your runway so you can fundraise at a more optimal time.

At Series B, your scaling success should be solid and sustainable, rather than based on rapid, experimental growth. Make sure you have the numbers (like increasing ARR and low burn multiple) to show efficient growth.

4. Successful pitch deck

When you prepare to raise for Series B, you’ll need a strong pitch deck to impress investors. The pitch deck should include information about your startup and its goals, while also incorporating storytelling in a clean, concise way.

 

That may sound like a challenge, but we have plenty of tips and templates below to help you get started.

Essential components for a successful Series B pitch deck

Most pitch decks fail because they forget to say what the startup actually does or because the deck is too long.

First and foremost, keep the pitch deck for Series B fundraising to around 10 slides, with a clear explanation of what your startup does on slide one. Don’t overcomplicate the description with fluff or jargon; make it easy for anyone to understand what you do.

Define a problem in your market, then explain how your startup’s product or service will solve that problem.

From there, make sure to include a market analysis, proof of product-market fit, growth metrics, financial projections, and team expertise (or why your founders are the right people to take this company to the next level).

HubSpot for Startups’ Pitch Deck Demolition is a series of videos that dive deep into pitch deck examples, providing feedback on what works and what doesn’t when pitching to investors. Be sure to explore the series to learn more about the essential components of a pitch deck, from slides on business models and market size to traction and competition.

Storytelling

Although the data are the most essential components of pitching successfully in Series B, you can also improve your presentation through storytelling.

As Lyn Graft, founder of Storytelling for Entrepreneurs and author of Start With Story, says, “Stories are the fastest, most effective way to reach someone on an emotional level.”

Emotional connections have been proven in studies to influence decision-making, plus storytelling can provide more credibility and provide a human touch to an otherwise data-centric presentation.

When incorporating storytelling into a pitch, don’t let fluff bog down the presentation. Focus on the company’s vision, what you’ve already achieved, and your plans for the future, all while backing up these stories with data.

Resources

Not sure where to start on your pitch deck? You don’t have to build it out with no guidance. This blog features 12 different examples of strong pitch decks from top companies like Uber, LinkedIn, Dropbox, and more. You can also check out these four free pitch deck templates from HubSpot to get started.

5. Answering investors’ questions

You calculated your runway, nailed the market timing, and prepared your pitch deck. During the pitch, investors will have questions, so it’s important to prepare for those, too.

Here are some key points to consider during the pitch:

• Growth metrics: Key performance indicators (KPIs) reveal how well a business is doing, but there are some metrics that investors prioritize over others. Be prepared to discuss your startup’s monthly recurring revenue (MRR), annual recurring revenue (ARR), market share, user acquisition, net revenue retention, and burn rate. Also, map out when you expect to begin turning a profit, ideally in the next 12 months, if you really want to make a strong impression.

• Scalability: If you’re pursuing Series B funding, you already have a growth mindset. But at this stage, you need to prove how you plan to continue growing and how you will adapt to rapid expansion. Highlight how your business model will scale as your customer base grows and explain how you expect to sustain long-term growth.

• Due diligence: Venture capitalists must do their due diligence before agreeing to invest in a startup. The due diligence process is a rigorous evaluation, and startups must prepare to undergo a financial review. You will need to provide comprehensive documentation for the business plan, budget, market, founding and management teams, and the legal standards your company needs to meet.

Final lessons and takeaway

With Series B fundraising leading to longer, but higher-funded, rounds for startups, now is a great time to get started on your presentation. Because the process can take several months, you’ll want to start compiling data and fine-tuning your storytelling skills in order to impress investors and earn your next investment.

Start by researching your target market and the investment market. Resources such as the Hypergrowth Startup Index will help you track the type of startups that are closing deals and how much money you can expect to raise in Series B.

Note your startup’s KPIs that prove traction and scalability, such as user acquisition, revenue growth, and low burn multiple, and prepare to share why your startup is right for solving a problem in your target market and how fresh investments will propel you beyond Series B into making a real difference for your customers.

Put this information into a sleek, concise, and engaging pitch deck, and prepare to answer investor questions on your growth metrics and scalability.

When all is said and done and you’ve closed that Series B round, you’ll be happy you started today.

Send DataSend DataSend DataSend DataSend DataSend Data

Send DataSend DataSend DataSend DataSend DataSend DataSend DataSend Data