Preparing your business for Series B financing

Looking to raise funds to take your business to the next level? This is a common challenge for scaleups and for any company in a hypergrowth phase. Series B investors want to know if you are ready for this next step. Whether you're still on the runway or about to take off, there are a number of ways to make sure your business is ready for Series B funding.

Given the recent downturn in markets, raising capital has become even more difficult for small businesses looking to expand. If you want to impress potential investors, you need to make sure your home is in order. Series B investors will delve into your finances, thoroughly analyzing and examining the performance of your business.

What is Series B financing?

Series A, B, and C financings are investments of various levels made by wealthy individuals or financial institutions in small businesses with growth potential. Series A is about the seed funding needed to get you started. Series B funding is about expanding your organization, and Series C is about expanding your organization.

The Series B stage will allow you to develop your team, acquire new talent, and set up human resources. You'll expand your sales and marketing, broaden your product designs, and gain new customers.

Series B funding can represent between $2 million and $20 million in scale-up support. This is an exciting time in your business journey, but it also means that investors will be much more attentive to reviewing your financial performance and business operations to ensure a good return on investment.

Ensure you have quality talent and human resources

In preparing for a B series, you'll need to take a step back and do an honest assessment of your team, starting with yourself. You'll need to hire people who have a proven track record in each key role. Is your current team ready to learn and grow with the business, or should you consider hiring new people with different skills and expertise?

Series B investors will look at the type of talent you attract and the processes you put in place to keep them. You will need to develop your human resources function to ensure that you can retain your best people. A human resources team will also ensure that the culture you've worked so hard to build can continue to thrive as you grow.

Reorganize your board of directors

Likewise, the composition of your board of directors is a critical part of Series B financing. You will need to assess and reorganize each seat on your board to be best suited to the future direction of the business.

At this intermediate stage of growth, it is best to have a small board of directors, composed of 5 to 7 people, who have business acumen and a good knowledge of the sector, and who have a network of contacts. Each of them must be committed to protecting the interests of your investors and stakeholders and to actively contributing to the growth of your business.

Get your data ready

Series B investors need solid data. They are going to be interested in accurate and reliable business valuation, background checks, credit checks, references, building and equipment leases, customer retention rates, business plans, and key financial data. They will need to hear a clear and compelling story of your business's origins, growth, achievements, and journey to market leadership.

Put all the odds in your favor. Prepare all of these in advance, so that when you approach investors for funding, you'll be able to succinctly back up your story with viable numbers. Your passion and your projections are important, but they need to be based on real logic and solid data.

Don't be afraid to disclose risks. By sharing both the growth potential of your business and your plans for dealing with potential downsides, you will impress your investors with your foresight and transparency.

Find the ideal investor

When you scale up, your business needs to be managed differently. Your investors will be very involved, they will share the business you've created and expect to have a say in how things are run. Make sure they are people you know and appreciate and who can provide knowledge and value.

Take time to think about who would be the ideal investor. Are you looking for someone with a keen sense of finance, a keen sense of business development, and industry expertise? Does he share your passion, purpose, and company values? Set up a series of potential investors in order to be selective and to constitute the best possible syndicate of investors.

As a small business with growth potential, the road is promising, but it is not without risks. Take time to strengthen your team and tell your success story. Your efforts will go a long way in impressing your Series B investors and help you take the next step.