Series B Financing

AAA

DEFINITION of 'Series B Financing'

The second round of financing for a business by private equity investors or venture capitalists. Successive rounds of financing or funding a business are termed Series A, Series B (and so on) financing. The Series B round will generally take place when the company has accomplished certain milestones in developing its business.




BREAKING DOWN 'Series B Financing'

Because the company will generally have advanced its business by the time of the B-round financing, it will typically have a higher valuation by this time. This means that the Series B investor will usually pay a higher price for investing in the company than the Series A investor. Private equity investors prefer convertible preferred stock to common stock for the various financing rounds because of the special features of preferred stock, such as dividend accrual and anti-dilution, that may not be available in common stock.

RELATED TERMS
  1. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  2. Alphabet Rounds

    The early rounds of funding for a startup company, which get ...
  3. Exit Strategy

    1. The method by which a venture capitalist or business owner ...
  4. Series A Financing

    The first round of financing undergone for a new business venture ...
  5. Antidilutive

    A term describing the effects of securities retirement, securities ...
  6. Security

    A financial instrument that represents an ownership position ...
Related Articles
  1. Investing Basics

    Top 10 Pfizer Venture Investments

    Learn more about Pfizer Venture Investments, a private equity venture capital firm, and some of the major companies in its investment portfolio.
  2. Investing Basics

    What Is Private Equity?

    This investment vehicle attracts wealthy investors to increase the value of portfolio companies.
  3. Mutual Funds & ETFs

    Private Equity A Trendsetter For Stocks

    In this article, we'll show you how private equity sets the trend for stocks everywhere.
  4. Mutual Funds & ETFs

    How To Invest In Private Equity

    Private Equity might be a pricey investment, but returns are on the rise and the payoff could be big.
  5. Personal Finance

    Seek An Adventure In Venture Capital

    Make a career out of chasing down the "next big thing".
  6. Entrepreneurship

    Top 5 Startups that Emerged in Toronto

    Learn how Toronto has built a fertile climate for startups, and identify some of the top companies to emerge from the city's hot startup market.
  7. Investing Basics

    5 Tips For Investing In IPOs

    It’s not easy to profit from IPO​s, but the money is there.
  8. Investing Basics

    5 Tips For Investing In IPOs

    Thinking of investing in IPOs? Here are five things to remember before jumping into these murky waters.
  9. Entrepreneurship

    Top 5 Startups that Emerged in London

    Learn why London's startup scene is so prolific, and identify some of the hottest companies emerging from this scene as of mid-2015.
  10. Professionals

    Tips on Building a Resume for a Private Equity Job

    Trying to land a job in the coveted private equity sector? Ensure your resume meets the stringent PE job requirements with these important tips.
RELATED FAQS
  1. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  2. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  3. How do you find the break-even point using a payback period?

    It does not make sense to find the breakeven point using a company's payback period. A company's payback period is concerned ... Read Full Answer >>
  4. What does residual value represent in a private equity investment?

    It is common to see a private equity investment's net asset value, or NAV, referred to as its residual value, since it represents ... Read Full Answer >>
  5. How many votes am I entitled to, if I own ordinary shares of a company?

    If an investor owns one ordinary share of a company, that investor is entitled to one vote on all of that company's major ... Read Full Answer >>
  6. What is considered a reasonable interest rate for a syndicated loan?

    A 2010 survey of syndicated loans found an average interest rate of 7.9%. However, the majority of syndicated loans are floating ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bubble Theory

    A school of thought that believes that the prices of assets can temporarily rise far above their true values and that these ...
  2. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  3. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  4. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  5. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  6. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!