Series B Financing

The second round of financing for a business by private equity investors or venture capitalists. Successive rounds of financing or funding a business are termed Series A, Series B (and so on) financing. The Series B round will generally take place when the company has accomplished certain milestones in developing its business.

Because the company will generally have advanced its business by the time of the B-round financing, it will typically have a higher valuation by this time. This means that the Series B investor will usually pay a higher price for investing in the company than the Series A investor. Private equity investors prefer convertible preferred stock to common stock for the various financing rounds because of the special features of preferred stock, such as dividend accrual and anti-dilution, that may not be available in common stock.