3 Funding Tips To Raise Millions During Your Series B Round

I recently experienced what it’s like to raise $80 million during a Series B round.

During this process, I learned the major difference between each financing round comes down to your relationships. By the time you start your Series B, you have a track record with institutional investors because you’ve already successfully made it through one round of raising professional money.

What to consider before you raise funding for a Series B

But you’ll find that the type of investors you need change according to the round. You have certain investors in the seed stage, and you take on new ones in your Series A. And when you start thinking about going public, that’s an entirely different group—the crossover investors.

It’s tricky because you have to remember that fundraising deals are about more than just the numbers on a spreadsheet. Most of the investors interested in your company know each other. They do deals together and compete against each other all the time. So the relationships between you, your Series A investors, and your potential Series B investors can be extremely difficult to navigate.

Managing these rounds is a high-quality position to be in, but it’s also one that takes plenty of careful preparation. And truthfully, if you’re beginning to think about your next round just before it starts, you’ve probably already lost.

Here are a few tips that I’ve learned about what it takes to secure financing:

  1. Balance the relationships between old and new investors.

Your Series B comes with the opportunity to build stronger relationships with your previous investors. That’s important because those are the people who will be talking about your company with other investors.

Remember, everyone has other companies in their portfolio—it’s not just your company they’re funding.

When your investors meet with others in the industry, you want them talking about your company rather than another investment. You also want them to be singing praises because there is no “neutral” when it comes to a recommendation. You need investors to truly be evangelists for your business, to talk you up wherever they go.

Think of it as a job reference. Nowadays, if a reference says anything less than, “This person is a rockstar,” people take it to mean that employee is essentially a dud.

The dilemma is that while your Series A investors were extremely important to you during that round, they may not be the investors you need going forward. If you are in a position where going public is a real possibility, then you need the crossover investors who will be there for you today and when you go public.

Typically, your Series A investors are not those crossover investors.

The back and forth between the two can be tricky, and you have to strike a balance between being fair to your current investors and bringing in the type of people you need going forward. Your job is to find a happy medium.

  1. Make time for everyone involved in the process.

When you’re in the thick of the funding process, it’s easy to begin thinking that the numbers are all that matters. You hit your milestones, you get your funding. Simple as that.

The truth is, the personal relationships you develop with your board and your investors can be just as important.

I remember after our Series A, things were going really smoothly. The company was doing well, and we hit our first milestone ahead of time. So I figured the next tranche of funding would be released to us, just like that.

Unfortunately, because we had been doing well and were transparent about our business, I hadn’t been putting in any time with some of the investors. I actually thought I was doing them a favor by not wasting their time.

That wasn’t the case. One of them told me, “Well, you never took the time to come to visit and talk about our partnership.” As soon as he said it, I thought, “Oh wow, that’s true.”

You can’t think of these relationships like an algorithm, where you plug in some numbers and everything comes out just fine. People want to feel like a part of the process, no matter the situation. My mistake was thinking the interactions in-between rounds weren’t important because everything was fine.

  1. Think about meetings as opportunities. Not hassles.

Most people don’t look at meetings the right way. They only see the pain of a disrupted schedule, not the opportunity.

And there’s a saying among CEOs that any board meeting where you don’t get fired is a good meeting. Trust me, I know there’s a lot of pressure. But you’re going to be judged on the way you act in every meeting because it’s the nature of being in a public setting. You can either take advantage of that judgment or allow it to take advantage of you.

During a funding round, the way you come across in meetings is extremely important. It goes back to the idea that you want your investors evangelizing about you. If you take the time and effort to hold effective investor and board meetings, you’re giving off a strong impression that you’re organized, reliable, and trustworthy.

While a great company will take you far, when there’s money on the line, it’s often your relationships that will get you and your team across the finish line.

Praveen is the President and CEO of Morphic Therapeutic Inc, a biotech company leading the development of a new generation of oral integrin drugs. Previously, he served as the Senior Vice President of Corporate Development and Global Strategy at Cubist Pharmaceuticals, until the company’s acquisition by Merck in 2015.

  • Originally published November 26, 2018, updated April 26, 2023