Master Series B fundraising (2025): $5M-$10M ARR requirement, 15-20% monthly growth rate, $20M-$60M median raise (up from $15M historically), 90-120 day timeline, Series B investor types, complete preparation checklist, data room requirements, due diligence process.
Table of Contents
- What is Series B? The Inflection Point
- Critical Series B Metrics: The New Bar
- Revenue Requirements: $5M-$10M ARR
- Team Requirements: From Scrappy to Professional
- Growth Benchmarks: 15-20% Monthly
- Series B Investor Types: Who Invests at This Stage
- Funding Amounts & Round Structure
- Series B Readiness Checklist (Pre-Fundraising)
- Timeline & Process: 90-120 Days to Close
- Due Diligence Deep Dive: What to Prepare
- Building Your Data Room: Essential Documents
- Step-by-Step Fundraising Process
What is Series B? The Inflection Point
Series B is the inflection point. It’s where startups graduate from “scrappy innovation” to “professional scaling.” The company is no longer proving product-market fit. It’s no longer asking “can we build something people want?” It’s asking “how do we scale this into a category-defining business?”
Series B funding is about accelerating what’s already working. You’ve built a product customers love. You’ve found repeatable unit economics. You’ve hired your first 50-100 people. Now you need $20M-$60M to hire 100-300 more people, expand into new markets, and dominate your category before competitors catch up
The psychological shift: Series A is about runway (can we survive?). Series B is about growth (how fast can we scale?). Series A founders often feel panic about capital depletion. Series B founders feel urgency about market capture. Different mindset entirely
Critical Series B Metrics: The New Bar
Series B investors don’t care about your vision. They don’t care about your founder story. They care about one thing: metrics. Specifically, financial metrics that prove you’re on a path to a $1B+ company
The bar has moved in 2024-2026. Pre-2021, Series B companies averaged $2M-$4M ARR. Today’s expectation is $5M-$10M ARR. This is not arbitrary. It reflects the market shift: investors want less risk, more proof
The Four Pillars of Series B Metrics
| Metric Category | Specific Metric | Series B Benchmark (2025) | Why It Matters |
|---|---|---|---|
| Revenue | Annual Recurring Revenue (ARR) | $5M-$10M (range is $4-15M depending on sector) | Absolute revenue size indicates market traction. $5M ARR = meaningful business |
| Revenue | Net New ARR growth YoY | 2-3x YoY growth (minimum 50-100% annually) | Companies slowing down are risky. Accelerating companies are candidates for unicorn status |
| Growth | Monthly Recurring Revenue (MRR) growth | 15-20% MoM sustained (or quarterly if YoY is 50-100%) | Monthly growth is the pace of your hockey stick. 15%+ sustained = unicorn trajectory |
| Retention | Net Revenue Retention (NRR) | ≥110% (ideally 120%+) | Expansion revenue from existing customers. 110%+ means customers are growing revenue with you |
| Retention | Monthly/Annual Churn | 3-5% monthly (target <3%) | Low churn indicates product-market fit. High churn = cash leaking out the back |
| Unit Economics | Customer Acquisition Cost (CAC) | CAC payback <18 months | If it takes 2+ years to recoup CAC, you’ll burn cash forever at scale |
| Unit Economics | Gross Margin | 60-80% for SaaS (varies by model) | Low margins = can’t scale profitably. High margins = efficient model |
| Team | Team Size | 50-150 people (varies, but >30) | You can’t scale a $10M ARR company with 10 people. You need organization |
The hierarchy of metrics: Revenue > Growth > Retention > Unit Economics > Team. If you have $10M ARR at 100% YoY growth but 20% churn, you’re a candidate. If you have $5M ARR at 30% YoY growth but 110% NRR, you’re also a candidate. The combination matters more than any single metric
Revenue Requirements: $5M-$10M ARR
The $5M-$10M ARR range is the new floor for Series B. But it’s not a hard line. It’s a signal
If you have $5M ARR with 150% YoY growth: You’re a prime Series B candidate. Investors will fund you
If you have $5M ARR with 20% YoY growth: You might struggle. Growth has stalled. Series B investors will ask “why should we invest when you’re slowing down?”
If you have $3M ARR with 300% YoY growth: You might still get Series B. The growth trajectory is more important than absolute revenue. But you’ll get a smaller round ($15M instead of $40M)
Real ARR Ranges by Sector
| Sector | Typical Series B ARR | Growth Rate Expectation | Example Companies |
|---|---|---|---|
| SaaS (B2B) | $5M-$15M | 2-3x YoY (50-100%+ YoY) | Rippling, Ramp, Canva (at Series B time) |
| Fintech | $10M-$30M (often higher) | 3-5x YoY (200%+) | Stripe, Square, Notion (fintech component) |
| Marketplace | $5M-$20M GMV | 3-4x YoY | Uber (at Series B), Airbnb (at B) |
| Consumer Apps | $2M-$10M (often lower) | 2-3x YoY user growth | TikTok (at B), Instagram (at B) |
| Enterprise Software | $3M-$8M | 50-100% YoY | Figma, Slack (at B) |
Team Requirements: From Scrappy to Professional
Series A is about a scrappy founding team. Series B is about a professional organization
Series A: “We have 2 engineers, 1 designer, founders doing everything else.” Series B: “We have VP of Engineering, VP of Sales, VP of Product, Finance manager, maybe even a CFO”
Typical Series B Team Composition
- Executive team (5-10 people): CEO, CTO/VP Engineering, VP Product, VP Sales, VP Marketing, CFO or Finance lead, sometimes COO or head of ops
- Engineering (15-40% of headcount): You need 15-30 engineers, organized into squads/teams with leads. Can’t scale with individual contributors
- Sales (15-25% of headcount): Sales leads, account executives, sales operations. Enterprise deals require structured sales teams
- Marketing & Operations (10-20% of headcount): Marketing manager, content, demand gen, product marketing. Operations staff for HR, finance, etc
- Customer Success (10-15%): Customer success managers, onboarding, support. Quality retention requires dedicated teams
What investors actually assess: Not just size, but depth of experience. “VP Engineering” who previously led teams at Meta or Google > “VP Engineering” who was an IC at a startup. Investors are betting on execution, not headcount
Growth Benchmarks: 15-20% Monthly
In Series A, 10% MoM growth looks amazing. In Series B, it looks like you’re stalling. The bar has moved. Series B investors want 15%+ MoM sustained growth
This is achievable, but requires discipline. It means:
- Sales efficiency: Your sales org must consistently hit or exceed targets. No excuses
- Product velocity: You must ship features that move the needle on adoption/retention every month
- Marketing momentum: Demand generation must drive consistent new pipeline
- Pricing discipline: You can’t just give away products. Unit economics must be healthy
Real math: $100K MRR today. 15% MoM growth. In 12 months: $534K MRR. In 18 months: $1.1M MRR. In 24 months: $2.4M MRR. This is how you get to Series C metrics (often $20M+ ARR)
Series B Investor Types: Who Invests at This Stage
Series B investors are different from Series A investors. They’re more institutional, more experienced, more selective
Main Series B Investor Categories
| Investor Type | Typical Check Size | Primary Motivation | Examples |
|---|---|---|---|
| Growth-stage VC Firms | $5M-$30M | Own increasing %, lead rounds, multiple follow-ons planned | Accel, Sequoia, Benchmark, Greylock, Andreessen Horowitz |
| Multi-stage VCs | $10M-$40M | Follow-on from earlier investments or new entry | Khosla Ventures, Bessemer, Sapphire Ventures, Tiger Global |
| Corporate VCs | $5M-$25M | Strategic benefit (integration, partnership, market position) | Google Ventures, Salesforce Ventures, Amazon Alexa Fund |
| Late-stage specialists | $15M-$60M+ | Pre-Series C/D positioning, path to IPO | Stripes, Insight Partners, Goldman Sachs Growth |
| Family offices & HNI groups | $2M-$20M | Follow-on from Series A or new thesis | Individual wealthy investors, syndicate groups |
Key difference from Series A: Series A investors want to own 10-20%. Series B investors often want 20-35%. They’re planning to own a significant chunk through exit
Funding Amounts & Round Structure
Series B round sizes have inflated dramatically since 2020. Here’s the current landscape:
2025 Series B Market Data:
Median round size: $38M (up from $30M in 2022)
Range: $15M-$100M+ (depends on sector, growth, team, market)
Typical range for most startups: $20M-$60M
Pre-money valuation range: $80M-$140M (median $102M)
Equity dilution: 14-20% typical (founders dilute 14-20% in this round)
Post-money valuation: ~$115M-$165M after Series B closes
Valuation math example: You raise $40M Series B. Investors want to own 20%. Post-money = $40M ÷ 0.20 = $200M. Pre-money = $200M – $40M = $160M. This is typical for a $6M ARR company with strong growth
Series B Readiness Checklist (Pre-Fundraising)
Before you approach Series B investors, you need to be ready. This checklist covers the non-negotiables
| Category | Requirement | Why It Matters | Red Flag If Missing |
|---|---|---|---|
| Financial Metrics | $5M+ ARR with 50%+ YoY growth + clear path to cash flow positive | Investors need conviction you’re building a durable business | If you have $3M ARR stalling, investors will pass |
| Unit Economics | NRR >110%, CAC payback <18mo, Gross Margin >60% | These determine if you can scale profitably | Bad unit econ = bad investment no matter how big the opportunity |
| Product-Market Fit | Clear customer demand, low churn (<5%), strong retention | Validates that market wants your product | If you have high churn, scaling just amplifies the problem |
| Team Composition | CFO or Finance lead, VP Sales, VP Product/Eng, VP Mktg | Investors want to see professional operations, not just founders | If you have no CFO at $6M ARR, you look immature |
| Financial Records | GAAP-compliant P&L, balance sheet, cash flow for 2+ years | Due diligence requires clean financials | If accounting is messy, diligence takes 6+ months |
| Cap Table | Clear, organized, <20 shareholders ideally (no more than 50) | Series B legal requires clean cap table | If you have 100+ shareholders, you have a cap table problem |
| IP & Legal | Patents filed (if applicable), IP assignment agreements, no major disputes | Investors want defensibility and no legal risk | If IP ownership is ambiguous, deal falls apart |
| Customer Base | 20-50+ paying customers, top 5 represent <30% revenue | Diversification = less customer concentration risk | If top 3 customers are 60% of revenue, investors are nervous |
Timeline & Process: 90-120 Days to Close
Series B takes longer than Series A. Expect 90-120 days from first investor meeting to capital in bank
Typical Series B Timeline
| Phase | Duration | What Happens | Your Focus |
|---|---|---|---|
| Preparation | 6-8 weeks (pre-fundraising) | Get financials clean, metrics clear, team ready, pitch deck polished | Internal execution. Don’t fundraise yet |
| Investor Outreach | 2-3 weeks | Identify 30-40 target investors, warm intros, send pitch decks | Relationship building, warm intro strategy |
| Initial Meetings | 2-4 weeks | Pitch 10-15 investors, gather feedback, refine narrative | Pitching, refining based on investor questions |
| Lead Investor Conviction | 2-3 weeks | 1-2 investors show serious interest, conduct deeper diligence calls | Deep dives on metrics, strategy, financials |
| Due Diligence | 30-60 days (overlaps with next phase) | Investor conducts legal, financial, technical, reference diligence | Respond to diligence requests, prepare data room |
| Term Sheet & Negotiation | 1-2 weeks | Lead investor issues term sheet, you negotiate terms | Legal counsel, negotiate valuation/dilution/rights |
| Final Close | 2-4 weeks | Execute final docs, signature, wire transfer, celebrate | Legal execution, board coordination |
Total: 90-120 days from first meeting to capital in bank is typical. Some take 60 days (hot rounds), some take 150+ days (complex equity structures)
Due Diligence Deep Dive: What to Prepare
Series B due diligence is 5-10x more thorough than Series A. Investors hire accountants, lawyers, and technical advisors to scrutinize your business
Areas of Due Diligence
- Financial Due Diligence (30-40 days): Accountants review 2 years of financials, tax returns, cash flow, revenue recognition. They’ll audit your revenue model, customer contracts, accounting policies. This is where you find discrepancies
- Legal Due Diligence (20-30 days): Lawyers review contracts, employment agreements, IP assignments, litigation history, regulatory compliance. They’ll identify potential liabilities
- Technical Due Diligence (15-30 days): Engineers review code, architecture, security, IP. They’ll assess technical debt and scalability
- Customer Reference Diligence (5-10 days): Investors will call 5-10 of your customers. They want to hear unfiltered feedback on product, service, and relationship
- Market & Competitive Diligence (10-20 days): Investors verify market size, TAM, competitive positioning. Often they hire third-party research firms
The bottleneck: Financial and legal diligence are the slowest. If your financials aren’t clean, diligence extends 30+ days. If you have IP disputes or employment issues, it compounds
Building Your Data Room: Essential Documents
A data room is a secure online vault where you store all documents for investor diligence. It must be organized, complete, and accessible
Financial Documents: P&L statements (2 years, quarterly breakdown), Balance sheets, Cash flow statements, Cap table (multiple versions showing dilution), Customer contracts, Revenue by customer, Detailed financial model and projections
Legal Documents: Articles of incorporation, Bylaws, Board minutes (2+ years), Term sheets from all previous rounds, SAFEs and convertible notes, Employment agreements, IP assignment agreements, Customer and vendor contracts, Insurance policies
Operational Documents: Customer list with ARR, Product roadmap (6-12 month), Organizational chart, Employee handbook, Stock option plan details, Board/investor update decks (6+ months of history)
Technical Documents: Tech architecture overview, Security audit or penetration test (recent), Privacy policy and compliance docs, Intellectual property documentation, Software licenses (open source, third-party)
Market Documents: Market size research, Competitive analysis, Customer acquisition cost analysis, Unit economics breakdown, Case studies (3-5), Customer testimonials
Organization is critical: Use folder structure. Financial/ Legal/ Operations/ Technical/ Market. Make finding docs easy. Bad organization signals bad operations
Step-by-Step Fundraising Process
Week 1-4: Preparation Phase
- Get latest financials audited or reviewed by accountant. Make sure P&L, balance sheet, cash flow are clean
- Build financial model for 3 years. Show path to profitability, scenarios (base/bull/bear case)
- Update pitch deck. Lead with traction (not vision). Include: metric snapshot, market opportunity, team, use of funds, 3-year projections
- Compile and organize data room. Folder structure ready. All docs digitized
- Hire Series B advisor/consultant if you don’t have investor relations expertise
Week 5-8: Investor Identification & Outreach
- Create target investor list (30-50 names). Focus on investors who’ve backed similar companies at Series B stage
- Get warm intros through advisors, existing investors, founder networks
- Send intro emails with 1-pager + pitch deck PDF
- Track responses, follow up, schedule meetings
Week 9-12: Pitching & Lead Investor Development
- Pitch 10-15 investors. Same narrative, listen to questions, iterate
- Target investors show interest. Schedule deeper conversations. Share financial model, answer detailed questions
- 1-2 investors emerge as potential leads (most likely to write big check)
- Continue pitching, keep options open
Week 13-16: Due Diligence & Term Sheet
- Lead investor requests access to data room. You set up secure access, share link
- Lead investor engages accountants, lawyers, tech advisors. They start diligence
- Prepare to answer detailed questions from diligence team
- Lead investor issues term sheet with proposed valuation, dilution, terms
- Negotiate: valuation, liquidation preferences, board seat, pro-rata rights, governance
Week 17-20: Final Close
- Lawyer drafts final agreements (stock purchase agreement, amended cap table, board seat letter, etc.)
- Negotiate final docs with investor’s counsel
- Get board approval, get all shareholders to sign off (if needed)
- Close: wire transfer happens, shares issued, funds received
Key Takeaways: Series B Explained
1. Series B is the scaling round: $5M-$10M ARR, 50%+ YoY growth, $20M-$60M capital raise. You’re no longer proving product-market fit; you’re dominating your market
2. The new metrics bar (2025): $5M-$10M ARR, 15-20% monthly growth, 110%+ NRR, <5% churn, >60% gross margin, CAC payback <18 months. All four pillars matter
3. Revenue is not the only metric: Growth rate > absolute revenue. A $4M ARR company growing 200% YoY can get Series B. A $8M ARR company growing 10% YoY will struggle
4. Team size: You need 50-150+ people to execute Series B plan. VP-level executives required (Sales, Product, Engineering, Marketing, Finance). Can’t scale a $10M ARR company with 10 people
5. Series B investors are different from Series A investors: Multi-stage VCs (Accel, Sequoia, Benchmark), Growth-stage specialists, Corporate VCs. They’re more institutional, more selective, more experienced
6. Funding amounts: Median $38M (2025), range $20M-$60M typical, up from $15M-$30M in 2021. Inflation + market competition means bigger rounds
7. Pre-money valuation range: $80M-$140M (depends on ARR and growth rate). Equity dilution: 14-20% typical. Founders should expect and prepare for 14-20% dilution
8. Timeline: 90-120 days from first investor meeting to capital in bank. Preparation (6-8 weeks) + Outreach (2-3 weeks) + Pitching (4 weeks) + Due Diligence (30-60 days) + Close (2-4 weeks)
9. Due diligence is the bottleneck: Financial (30-40 days), Legal (20-30 days), Technical (15-30 days), Customer refs (5-10 days). Clean financials = faster diligence. Messy financials = 90+ extra days
10. Series B readiness checklist: Metrics ✓, Unit economics ✓, Product-market fit ✓, Team ✓, Clean financials ✓, Clear cap table ✓, IP clear ✓, Customer diversification ✓. Missing any = investors will find it in diligence
11. Data room is critical: Organize every financial, legal, operational, technical document into folders. Bad data room = signals bad ops. Investors judge you by preparation
12. Series B investor wants to own 20-35% (larger stake than Series A investors). They’re planning to hold through Series C/D and into exit. They want significant ownership
13. Use of funds typically: 40-50% Sales & Marketing (hiring, scaling go-to-market), 30-40% Product & Engineering (new features, scaling platform), 10-20% Operations (finance, legal, HR). Investors scrutinize this heavily
14. Customer concentration matters: Top 5 customers should be <30% of revenue. If top 3 = 60%, investors see risk. Diversified customer base = lower risk
15. Lead investor is crucial: You need 1 strong lead who believes and champions you internally. Can’t close Series B without lead conviction
16. Negotiation priorities: Focus on valuation first, then dilution %, then control (board seat, pro-rata rights). Don’t give away governance for small valuation bump
17. Reference calls are part of due diligence: Investors call 5-10 customers. Choose customer references carefully. Unhappy customer on reference call can kill deal
18. Series B typically 18-24 months after Series A. If you raise Series A and approach Series B in 9 months = too fast, metrics not real. If you wait 4 years = you waited too long, growth has stalled
19. Action plan: (1) Get financials clean (4 weeks). (2) Build financial model (2 weeks). (3) Create investor list (1 week). (4) Get warm intros (2-3 weeks). (5) Pitch and gather feedback (4 weeks). (6) Prepare diligence docs (2 weeks). (7) Close with lead investor (4+ weeks)
20. Remember: Series B is about execution, not vision. Investors don’t care what you could do. They care what you’ve done. Metrics + team + traction = Series B funding. It’s that simple