What is Series C Funding?
Series C funding refers to the third (and usually ‘final’) official round of financing by venture capitalists or other investors.
When does Series C funding happen?
Series C can happen within a year of Series B, but is much more likely to happen two years after.
How much equity do investors take at Series C?
Small business owners should expect to give away around 10-20% of their company equity at this stage, which is similar to Series B.
How does Series C differ from other forms of investment?
At this stage, investors expect you to be batting in the big leagues.
This means you’re demonstrating rapid scaling of your employees, your customers, and your systems – investors will want to see it all. With the potential to reach an initial public offering (IPO) in sight at this stage, it’s all hands on deck.
This is a round where investors will have many more opinions and may actually want to become more hands-on than ever before. This is a stage not many companies reach, so, if you have, it signals exponential success for everyone.
To achieve this kind of scaling, investors may be expecting you to do things such as buying other companies or other technologies to achieve that immediate uptick of people and resources needed for your large-scale operations. It might also mean launching new verticals, new product ranges and demonstrating optimisation of your traditional model.
What are the benefits and drawbacks of Series C Funding?
The biggest benefit of reaching Series C is that your company will have a lot of eyes on it!
You won’t be at a loss for attention, whether that’s options for financing, or attention from the public and the media. Your company will be considered a household name, an innovator or industry standard, and the one to watch.
This popularity, however, can also become a potential drawback.
This round is fast-paced, and there will be a lot of feedback and opinions flying about. The downside is that a founder or senior team can be drawn into a hundred different directions – and it will be up to the leadership to keep a level head, keep the stakeholders happy and the team on track.
A business courting Series C funding will be blooming already. Investors (particularly late-stage investors) may also be aggressively pursuing you to claim more equity. Now that the company is considered practically fool-proof, this is what investors see as the ‘last official stage’ to invest at a good price to still gain a good return in future before it becomes too saturated or overly expensive after entering the public market.
You may even need to ensure that you maintain the lion’s share of your business, to avoid investors having too much power and using it to potentially oust you from your own company.
If not wholly prepared, business owners and founders may find the new pace hard to keep up with. This may damage the trajectory of the business at the very last hurdle.
Is it hard to get Series C funding?
It is very hard to get Series C funding.
Few companies reach Series B funding, and fewer still reach the Series C stage as they are unable to progress at a safe and steady pace. Even without failing, a business may not be particularly innovating, or exponentially growing at legendary levels.
Read the full article here