The fourth stage of startup financing or the last stage of venture capital financing
Over 2 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course. Start Free
What is Series C Financing?
Series C financing (also known as series C round or series C funding) is one of the stages in the capital-raising process for a startup. The series C round is the fourth stage of startup financing and typically the last stage of venture capital financing. However, some companies opt to conduct more rounds, such as series D, E, etc.
How Does Series C Financing Work?
Similar to previous stages of financing, the series C round primarily relies on raising capital through the sale of preferred shares. The shares are likely to be convertible shares. They offer holders the right to exchange them for common stock in the company at some date in the future.
Strictly speaking, companies that aim to obtain series C funding are no longer startups. They are usually established, successful companies in their late stages of development, with solid revenues and profits. Their core products or services generate strong demand in the marketplace, attracting a substantial customer base.
Companies seek series C financing for further expansion to reinforce their existing success. Following a series C round, the company aims to scale up its operations and continue its growth. The proceeds from this financing round are most commonly used for entering new markets, research and development, or acquisitions of other companies.
Key Players
Many investors from previous financing rounds (venture capital firms and angel investors) tend to participate in the series C financing round as well. The players can opt to inject additional capital in the company and attract new investors.
This round of financing often attracts new players as well. Unlike the previous stages of financing, in which most investors are venture capitalists and angel investors, large financial institutions such as investment banks and hedge funds are willing to participate in the series C round. This can be explained by the lower risk associated with the investment since the company is already established and relatively successful. The chances of the company’s default at this stage are relatively low.
Note that companies at the later stages of development generally come with high valuations. Thus, potential new investors are likely to pay high prices for the company’s shares.
More Resources
Thank you for reading CFI’s guide to Series C Financing. To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below:
FAQs
Series C funding is often the last round that a company raises, although some do go on to raise Series D and even Series E rounds — or beyond. However, it's more common that a Series C Funding round is the final push to prepare a company for its IPO or an acquisition.
What is C financing? ›
In Series C rounds, investors inject capital into successful businesses in an effort to receive more than double that amount back. Series C funding focuses on scaling the company, growing as quickly and successfully as possible. One possible way to scale a company could be to acquire another company.
What is the average funding for a Series C? ›
A Series C funding amount is generally between $30 and $100M settling on an average round of $50M. At this point, a startup's valuation is likely over $100M and they are on a national radar looking to expand internationally.
How long after series C to IPO? ›
Analyzing the startups that raised funds by IPO shows that it usually takes 4 to 9 years to reach the stage of IPO from Series C.
What happens after series C? ›
Once you get to Series C funding, your investor range broadens. You can expect hedge funds, private equity firms, and investment banks to get involved in this round of funding. You have revenue (usually net), growth, a huge customer base, and a kick-butt team. Thus, your valuation will be tied to more concrete data.
How do I prepare for Series C funding? ›
One of the most important things you'll negotiate with investors is your company's valuation. Be realistic about what your company is worth and be prepared to justify your valuation with data and logic. Investors want to see that you have a clear plan for how you're going to use the funding you're seeking.
What is a C finance? ›
AC finance, also known as Air Conditioning Financing, refers to a specialized financial service that assists individuals and businesses in acquiring air conditioning systems.
What does C mean in a loan? ›
The five Cs of credit are important because lenders use these factors to determine whether to approve you for a financial product. Lenders also use these five Cs—character, capacity, capital, collateral, and conditions—to set your loan rates and loan terms.
What is a Type C loan? ›
C Loan means a Mortgage Loan owned by Seller to a Mortgagor with a `C' credit history which is underwritten in accordance with originator's underwriting guidelines for `C' credit Mortgage Loans.
How much equity should I get Series C? ›
As a rule of thumb, a non-founder CEO joining an early-stage startup (that has been running less than a year) would receive 7-10% equity. Other C-level execs would receive 1-5% equity that vests over time (usually 4 years).
During the series funding, the founder has to prove that their idea has strong market traction. Most investors do not expect that they have already turned a profit until much later on. This stage requires the startups to demonstrate that they only need time and money to achieve success.
How much do you get paid for Series A funding? ›
The average Series A funding as of 2020 is $15.6 million. In Series A funding, investors are not just looking for great ideas. Rather, they are looking for companies with great ideas as well as a strong strategy for turning that idea into a successful, money-making business.
Is series C late stage? ›
Late stage (Series C)
Late-stage startups are doing whatever they can to sustainably increase their valuation ahead of an exit. During this time, startups might explore some or all of the following growth methods: Diversifying the types of products or services they offer.
Do founders make money in Series A? ›
It's very typical for founders to draw a salary after they raise funding. Startup founder salaries vary based on the amount of funding raised, the stage of development, the founder's role and experience. Kruze's data shows that seed stage founders average $133,000 in salary, where as Series A founders average $183,000.
What is the Series C fundraising process? ›
Similar to previous stages of financing, the series C round primarily relies on raising capital through the sale of preferred shares. The shares are likely to be convertible shares. They offer holders the right to exchange them for common stock in the company at some date in the future.
What is a Series C mutual fund? ›
C Funds that have lower investment minimums and carry a level-load structure. This sales charge is typically a recurring fee of 1% that is used on an annual basis to compensate advisors. C shares do not include a front-end sales charge, but their expense ratio is typically higher than B shares.
What is a series C preferred stock? ›
Series C Preference Shares means the Company's validly issued, fully paid and nonassessable 6.375% Fixed-Rate Reset Perpetual Non-Cumulative Preference Shares, Series C (liquidation preference $25,000 per share), $1.00 par value per share.
What is C1 funding? ›
C1 is a Secondaries Fund with a focus on companies in the Digital Assets space investing globally with a presence in Silicon Valley and UAE.
What is a series D? ›
Series D funding is not as common as earlier funding rounds, as not all startups progress to this stage. This series of funding is usually done by companies that want to increase their funding even more before going public with an IPO or seeking an acquisition.
