By Tracy Miller
Mar 22, 2022
| News

Series A funding (also known as Series A financing or a Series A round), is an early stage capital raise for a startup. It is the second phase of startup funding, taking place after the seed funding round occurs.

Unlike with seed funding, by the time a startup is ready for a Series A round, the business will be off the ground. When a startup is ready to undergo a Series A funding round, they will have reached a stage in their development where they need crucial funds to launch or grow. This could include hiring a team, manufacturing product or investing in marketing. It’s a critical point for a startup which will be relying on this capital to move forward.

What are the sources of Series A funding?

Investing in a startup in its early stages is a high risk, high reward investment. Therefore when seeking capital at this stage, it’s not as simple as going to the bank for financing. A bank won’t lend when a company is yet to prove itself.

Instead, the most common source of funding for Series A is venture capital (VC) firms. VC firms represent sophisticated private investors looking to invest in startups in exchange for equity. They’re interested in helping investors get in on the ground floor of a business before it takes off. Investors are looking for exponential growth opportunities with businesses in their infancy.

Similar to VC firms, angel investors are also looking for high growth companies in their early stages with a chance for a big pay off. An angel investor is a person or company who is willing to invest directly in a startup.

Another option at the Series A stage is equity crowdfunding which enables a higher volume of investors to purchase a share in a startup.

How much Series A funding can startups raise?

Typically Series A funding will average somewhere between $1 million and $15 million. This will depend of course on how the company is valued and its prospects. Often investors will be looking at startups with a $10 million plus valuation to ensure their investment is worth it.

What is Series A Funding?

How to calculate how much Series A funding is required

The best place to start is to calculate your runway. Runway refers to how many months your business has left before you run out of money. It’s calculated by taking your starting cash balance and dividing it by your net burn rate (the difference between cash in and cash out). Typically startups will look at a 12-18 month runway which is usually enough time to hit the required milestones.

Another consideration is how much equity you want to give away. The more funding you’re given, the more equity you’ll need to give away or the more debt you’ll need to pay back. This can have serious implications in the mid and short term so you don’t want to rush the decision.

What makes a company a desirable investment for a Series A round?

With an influx of startups in the market, it’s become increasingly competitive to source Series A funding. In fact, many startups at this stage will fail to secure funding and may go under (a phenomenon known as the ‘Series A Crunch’. What can make a difference to investors is a track record of early success, proof that the business is or will be profitable and a clear and distinct value proposition.

Working with an experienced accounting partner to raise Series A funding can make an enormous difference for your chances of success. They can help you calculate your runway, prepare the necessary financial reports and ensure your financial governance is sophisticated enough so you can answer any questions VC firms or investors may have.

If you’re looking to source Series A funding in Australia or internationally, Keeping Company can help. We’re experts in this space. We can connect you to the right people to source Series A funding and help you prepare for and guide you through the capital raise process. Contact us today to find out how we can help you with your Series A round.

At Keeping Company, we’re not just accountants, we’re business people too. With our counsel, your business can reach its full potential. 

We have a team of experts; Cloud Accountants, Business Advisors, Finance Specialists working together and ready to help, contact us today.

1300 533 787


For all media enquires please contact Tracy Miller, CMO, Keeping Company 0414 898 452.

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.