The B2B SaaS Financial Model Template
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Your Series B marks the transition from early-stage startup toward growth stage. This is the money you'll use to pour fuel on the fire of your high-growth business — if you can close the round. Here's what you need to know to successfully raise your Series B.

Pre-seed funding, seed funding, and your Series A round — these rounds are what constitute the early rounds of the startup journey for entrepreneurs.

But once you raise a Series A, the intensity picks up. And according to Ross Fubini, Managing Partner at XYZ Venture Capital, there are quite a few reasons why. He says you have to:

Iterate that much faster to plan out your go-to-market…Track how long an upsell really takes and who is getting the comp check…Staff engineers to get to enterprise quality. Spend on marketing for qualified leads, but not too much. Do all the hard work and do it with hard data.

Ross FubiniManaging Partner, XYZ Capital

That whirlwind (and shortlist) of requirements is what it takes to execute following your Series A. But as you do, you have to keep an eye on what it’s going to take to raise your next round. Here’s what you need to know about hitting the next big milestone in startup growth — your Series B.

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What Is Series B Funding?

Series B funding is the round at which you’ve proven not just the strength of your product-market fit but also the ability to scale your business model and pricing strategy to create a go-to-market flywheel.

Raising a Series B round of funding means you’ve grown beyond early-stage funding, where development is key, and into the growth stage. Your company has reached a much higher level of maturity with a more formalized leadership team, and the Series B funding is meant to catapult the business into the next level of growth to reach later-stage financing rounds.

How Does Series B Funding Work?

Series B funding works much the same way as Series A in that you’re likely raising most of the money from traditional VCs (often a combination of new investors and existing ones) with one firm acting as the anchor for the round. While some angel investors may join at Series A, Series B is when you’ve entered a level of growth and maturity that essentially phases those types of investors out. If you’re raising money beyond equity crowdfunding from venture capitalists, you’ll likely be looking at some level of debt financing to supplement the round.

The basic steps to raise a traditional round of venture capital will remain the same. Connect with potential investors, go through your pitch deck, complete the due diligence process for interested firms, and assess any term sheets you receive.

What Series B Investors Look For

Where raising a Series B differs from raising a Series A is in the scrutiny of both your historical metrics and forecasted growth.

Series A investors will evaluate your numbers, but they’re still largely betting on an uncertain future. At Series B, you need to provide evidence that you’re operating efficiently already and demand for your product is strong. But more than that, John Luttig of Founders Fund says that investors want “a sense of, if things go right, what does this company look like in five to ten years from now?”

You need to paint a picture that answers the question while also showing you have a track record of executing the vision. To do that, you’ll need to build a data room that includes the following metrics:

  • ARR and growth rate. Revenue growth will always be the first thing investors look at. Ideally, you’re still doubling or even tripling annually at this stage.
  • Net revenue retention. You’ve gone through at least one meaningful renewal round. How effectively are you getting customers to increase spending over time?
  • Burn multiple. A critical capital efficiency metric at every stage of funding. Are you managing cash flow to trend toward a best-in-class burn multiple of 1x or less?
  • CAC and CAC payback. You raised a Series A to build out the go-to-market motion. How much are you spending to acquire customers, and how efficiently are you paying that back?
  • Sales conversion rate. Show that the sales team you built out is effectively closing deals and converting the growing demand for your product.
  • Sales rep ramp. As you build out the sales team, you need a proven track record of getting new reps up to speed quickly to build confidence in your ability to scale.
  • Pipeline generation by channel. Series B is all about market expansion. Showing growth in pipeline at the channel level helps show you’re ready to capitalize on increased demand with new product development and go-to-market scale.

In a perfect world, your business will be setting best-in-class standards for these metrics and any other relevant SaaS metrics. But for most companies, especially at this stage of growth, there will probably be some standout metrics and others that could use improvement. This is why John Luttig says successful Series B pitches should address problem areas head-on.

I think you want to start with the most risky pieces of your business, craft a narrative around them, and build a quantitative case for why those risks are overblown or will be de-risked over the next few quarters.

John LuttigPrincipal, Founders Fund

If you can weave that narrative effectively, you’ll be well on your way to landing your Series B.

Major Series B Investors

Once you get beyond the seed round and Series A funding, the active pool of investors starts to look similar from stage to stage. As such, major Series B investors are typically institutional investors such as multistage venture capital firms in addition to some growth stage-specific funds.

In Q1 2023, Crunchbase found the most active multistage and growth investors were:

  • Andreessen Horowitz (10 rounds led)
  • General Catalyst (9 rounds led)
  • Google Ventures (8 rounds led)

Historically, other major names such as Founders Fund, Sequoia Capital, Battery Ventures, and Tiger Global Management have appeared high on this list. Given the market downturn of mid-2022 that has extended through 2023, investment activity has changed dramatically.

When Series B Financing Makes Sense for Startups

There’s no universal “right” time to raise a Series A. Your Series A valuation and amount raised, existing equity stake in the business, current cash runway, and industry are all variables that can significantly change the timing of your Series B.

However, there are a few general mile markers you can look at to decide whether or not your company might be ready to raise its Series B.

  • Are you sitting somewhere between $4 million and $10 million in ARR?
  • Is your business still growing at least 100% year-over-year?
  • Are you moving toward strong net revenue retention based on your ICP?
  • Have you built out the leadership team, at least to some extent?
  • Is there evidence that you can win the space while maintaining strong capital efficiency?

Those last two questions are somewhat subjective, but they’re critical to showing investors that you’ll be able to take the Series B funding and put it to the best use possible. That’s because, according to Fivetran VP of Finance Kalor Lewis, keeping spending in check is one of the hardest parts of managing the business post-Series B. He said:

The main challenge at this stage of growth is just handling the momentum. It’s so easy to get caught up in incremental spending that causes hypergrowth to get out of control. You want to pour even more fuel on the fire, but you have to keep things in check.

Kalor LewisVP of Finance, Fivetran

Get your metrics roughly in the realm of normal Series B ranges, and make sure your leadership team is strong enough to handle the momentum following the influx of cash. Check those two boxes, and you’ll know it’s time to raise a Series B.

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Prepare for Your Series B Funding Round with Mosaic

The truth is that it’s harder to raise a Series B in 2023 than it has been in 5+ years, with total deals dropping to a 2-year low. You need to paint your company in the best light possible to impress investors and land a round right now. And Mosaic can help.

Crunchbase data on Series B funding through Q1 2023
Crunchbase data on Series B funding through Q1 2023

So much of your Series B pitch is about proving that you’re in total control of the numbers and have a strong narrative about how they’ll grow into the future. Mosaic’s out-of-the-box financial dashboards populated with real-time data ensure you can answer any investor question on the fly — and spend more time building your growth story than putting spreadsheet analysis together.

executive financial dashboard with high level overview of key KPIs
Example executive financial dashboard in Mosaic

Mosaic also gives you more flexible modeling tools, which help you quickly create multiple scenarios to show investors the different paths to success. The combination of granular historical analysis and comprehensive, forward-looking plans will spark confidence among investors and put you in a better position to earn term sheets.

John Luttig has said that “Mosaic makes metrics a lot easier to pull together and track over time. You’re not going to be acting as reactively if you’re using that product.” And that’s exactly what investors want to see — proactive founders who can execute the vision they’re laying out. Want to see how Mosaic can set you up for Series B success? Reach out for a personalized demo before you start your next fundraise.

Series B Startup Funding FAQs

How does Series B funding differ from earlier funding rounds?

Series B funding differs from earlier fundraising rounds in terms of scrutiny over historical performance and financial plans. At this stage, you need to show a deeper understanding of financial and operational metrics while showing that there’s a proven track record of executing the company vision. Investors also anticipate more maturity in terms of financial forecasting, often expecting the use of advanced financial forecasting software for precise growth planning. This shift signifies the increased expectations and complexity that come with Series B funding compared to its earlier counterparts.

How long does a Series B funding round typical take?

What are some examples of successful companies that have gone through a Series B funding round?

How can Mosaic help with Series B funding?

What Comes After Series B Funding?

When Can a Company Go Public?

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