Trying to close a Series B in 2023? Read this first

3 min read


Despite ongoing economic uncertainty, there will always be a path forward for determined founders with strong ideas and smart investors with an eye for opportunity. But make no mistake, the challenges are real and sizable. Global funding in Q1 2023 was down 53% compared to Q1 2022, a precipitous drop hastened by broader market turbulence and fears of a prolonged downturn.

And the stagnation wasn’t limited to just late-stage funding either. Crunchbase analysis revealed that Series B investment in the second half of 2022 was down over 60% from the same period the year before — putting Series B investments on track to come in at the lowest quarterly level in more than three years.

With this backdrop, our company began our Series B round of fundraising in early 2023. We went into the process aware that our sector has historically suffered in a down economy, but we chose to focus on the positives — namely that our ability to close in this environment would showcase the quality of our business and that any investors willing to make an investment despite the challenges would result in a stronger long-term partnership.

How we closed our $25 million Series B in April 2023: 5 key factors

For us, we knew we were ready for a Series B when:

  • We were cash efficient with a burn multiple under 1.
  • We had proven product-market-fit and go-to-market fit with excellent unit economics.
  • We had strong retention, in our case a net revenue retention rate (NRR) of 149%.

From there, it was all about execution. Here are five other strategies that helped us close our Series B.

Set the foundations to scale: Team, process and expertise

Series B rounds are all about scaling the business. The scrambling and existential doubt you had as an entrepreneur won’t go away, but by this point, you should have built a strong executive team around you that is, frankly, more skilled at scaling their individual functions than you are. As soon as you land the Series A, start to lay a real business foundation — pivoting from a survival mindset to a sustainable one.

We embraced this, and after closing our Series A, we built the groundwork throughout 2019 that enabled us to take advantage of the unique opportunity that the COVID-19 pandemic created. Ultimately, this strong foundation led us to close our Series B round in an extremely challenging market.

There will always be a path forward for determined founders with strong ideas and smart investors with an eye for opportunity.

Your org chart doesn’t have to be fully built at this stage, but you should have a plan to scale. When building out our exec team, we balanced homegrown talent that had progressed internally with individuals who had achieved success at the next level of scale than we operated currently.

When raising a Series B, it is important to hire execs with experience for this stage of the company. A CRO who is used to scaling from $50 million ARR to $100 million ARR has a very different skill set than what you need to scale from $10 million to $30 million ARR. For example, when looking for a VP of finance, we wanted someone with a track record of closing Series B and C investment rounds, as that was the next step for us.

Understand potential investor reservations, then create a plan to counter them

When fundraising, a common piece of advice for founders is to start with your tier 3 funds first and work your way up to pitching tier 1. This gives you the opportunity to learn what questions investors will ask and what objections you might receive before you sit down with the big guns.

This didn’t work for us. The challenge with starting with “tier 3” funds is that the “tier 1” funds often have more context about your space (at least they should if you’ve tiered correctly) and therefore the quality of the questions they ask are far superior to the ones you’ve been prepping on from “tier 3” fund conversations.

Instead, we sought to understand the common objections investors would have about investing in our business through informal catch-up calls when we weren’t in fundraising mode. This enabled us to understand potential investors’ objections upfront without going through the “tier 3” to “tier 1” process while still addressing those objections directly. In these introductory conversations, we were frequently asked the following:



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