Series A Financing


DEFINITION of 'Series A Financing'

The first round of financing undergone for a new business venture after seed capital. Generally, this is the first time that company ownership is offered to external investors. Series A financing may be provided in the form of preferred stock and may offer anti-dilution provisions in the event that further financing through preferred or common stock occurs in the future.

Also known as "A round" or "A round financing."

BREAKING DOWN 'Series A Financing'

Series A financing tends to occur when the company is generating some revenue from its business model, but rarely will the business be generating net profits at this point. Most series A investors will be venture capital funds or angel investors who are willing to accept the high levels of risk found in these early-stage company investments.

As an enterprise grows and requires additional capital, the subsequent rounds of preferred stock issued to investors are called Series B, Series C, and so on. This allows investors in those subsequent rounds of financing to know where they stand in the hierarchy of claims to future profits. Typically, the business is revalued before each round of financing, so terms of conversion may be vastly different for different rounds depending on the valuation of the company at each stage.

  1. Preferred Stock

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  2. Series B Financing

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  3. Liquidation Preference

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  4. Angel Investor

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  5. Exit Strategy

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  6. Common Stock

    A security that represents ownership in a corporation. Holders ...
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