Supported by:

The Handbook

for Series B & C

Fundraising
Table of contents

1 Introduction 3

The state of Series B and C fundraising in today's market environmen

What has materially changed between 2022 and 202
The key components for successful fundraising

2 Defining Series B & C fundraising 7

What distinguishes Series B & C from earlier round

What are investors looking for in a Series B and C investment

3 The metrics investors are looking for 10

Growth vs profitability benchmark

Capital efficiency benchmark
Operational efficiency benchmarks

4 Investor outreach and due diligence 17

Identifying potential investors and managing the proces

Round dynamics and core expectations

5 Mistakes to avoid in the current market 20

6 Putting your fundraising process into action 22

Translating the funding process into an operational pla

Driving operational success with Abacum

7 Conclusion 26
1

Introduction

3
The Handbook for Series B and C Fundraising

Introduction

The State of Series B and C

fundraising in today's market

After one of the longest bull markets in history over the past decade, global tech markets came to a
crashing halt in 2022. As a result, the fundraising perspective for many high growth companies has
materially worsened across public and private markets. This latest market correction marks the third
major tech downturn in the Internet era, following the Dot-com Bubble in the early 2000s and the Great
Financial Crisis in 2008–09.

As a consequence, the fundraising climate for

venture-backed late stage companies became
increasingly difficult as many investors opted for a
more cautious posture when it came to deploying
capital. 

This handbook aims to

provide founders and This effect became especially visible in Q3 2022,
when accumulated late stage funding rounds
finance operators with the collapsed by ~43% QoQ according to
Crunchbase.

context required to
navigate this challenging This downward trend, was only upheld by two
major equity rounds in Q1 2023, when the mega
fundraising market investments in OpenAI and Stripe helped put
landscape accumulated late stage funding at a total of
USD43bn.

Looking back, the last 12 months provided a

reckoning moment for global tech markets,
conditioned by a mix of rising interest rates, rapid Global late stage funding
inflation and geopolitical tensions, that culminated
1000
in growing recession concerns.

$100b

$80b 800
This dynamic caused the market capitalization of
umber of Deals

600
total $ invested

$60b
public high growth companies to shrink by as much
as ~80% in some cases and subsequently clearly $40b 400

spilled over into private markets. 

$20b 200
N

0 0
Q1’22 Q2’22 Q3’22 Q4’22

t oa
t l $ i n es ed
v t N u ber of ea s
m D l

4
The Handbook for Series B and C Fundraising

Introduction

What has materially changed between

2022 and 2023
In light of the above, growth-stage companies have been impacted more adversely than early-stage
companies. With many late stage companies being re-evaluated, which, in most instances today, leads to
a markdown in valuations.

In this climate, investors have become more

discerning and are increasingly requiring terms that Median funding amount raised
provide downside protection and minimum return
thresholds, such as liquidation preferences beyond $60m
1x, valuation ratchets, or participating rights.

$50m

In this context, discussions on structure are $40m

becoming more commonplace, with investors and $30m
founders focusing on instruments such as preferred $20m
equity in favor of common equity, particularly in
growth rounds. $10m
$0
Q1’22 Q2’22 Q3’22 Q4’22 Q1’23
The most striking characteristic in
this current market is investor Series B Series C

focus on seeing a viable path to

profitability and solid unit
economics in companies
Median pre-money valuations
Strategically speaking, as traditional sources of $300m
funding are becoming more expensive, companies
should focus more on raising their next round of $250m
funding strategically, rather than the high frequency $200m
capital raising and maximising growth strategy from $150m
the 2021 era. This implies, ensuring operational
execution, prioritizing profitability, healthy burn rate, $100m
and building relationships with investors who share $50m
your long-term vision. 

0
Q1’22 Q2’22 Q3’22 Q4’22 Q1’23
To succeed in this capital-constrained environment,
next to the standard way of structured fundraises, it Series B Series C
is smart to be prepared and consider the
opportunity of a preemptive fundraise when it
presents itself. This might mean, taking in money at
less attractive terms than previously, in favor of
more security and deeper cash reserves in light of a
continued contraction of the market.
5
The Handbook for Series B and C Fundraising

Introduction

The key components for successful

fundraising
In today's market environment, preparation is key to successful fundraising. Companies seeking Series
B and C funding must be well-prepared and have a thorough understanding of all the details of their
business model, financials, and growth potential.

Investors are asking more questions and taking longer time for more detailed due diligence. They are
looking for companies with a clear vision and a strong track record of execution, and they want to see a
thoughtful plan for growth that is both ambitious, efficient and achievable. This means that you need to
present a clear thesis on the market and competition, as well as their strengths and weaknesses.

Regardless of current market dynamics, successful fundraising always requires a combination of strategy,
preparation, and execution. However, in light of the above, companies looking to raise a Series B and C
funding round should focus on the following points to help ensure success:

Pitch Market
The objective needs to be crafting a Investors are still looking for companies that
compelling pitch that clearly articulates your are addressing real-world problems and have
value proposition and growth potential amidst a strong understanding of their target market
the challenging macro environment. Your and customers. Make sure to articulate this
pitch should be concise, persuasive, and market opportunity, demonstrate your deep
backed by metrics that tell the story of how understanding of your customers’ needs, and
your company is mission-critical. show how your product or service addresses
those needs.

Financials Team
Investors want to see a clear and realistic Companies should emphasize strong teams
financial plan that includes revenue and with a track record of execution and a clear
expense projections, cash flow forecasts, and vision for the future. This is also the best
a clear plan for scaling the business. opportunity to shine light on the strong hires
Companies seeking funding must be able to you made and how this enables you to take
demonstrate a path to profitability and a plan the company to the next level.
for managing cash flow.

6
2

Defining

Series B and C
fundraising

7
The Handbook for Series B and C Fundraising

Defining Series B and C fundraising

What distinguishes Series B & C

from earlier rounds

As opposed to earlier funding rounds, Series B and C fundraises are not about taking risks or
experimenting with product iterations and different go-to-market motions. Instead, the focus is on
optimizing and scaling what already works.

These investors are typically looking for more

mature companies that have already demonstrated
a strong ability to generate revenue and are
seeking to invest in a company's long-term growth
potential.

The aim of Series B and C

funding is to rapidly Achieving major milestones such as rapidly
growing revenues and ACVs or achieving
expand a company's profitability in certain geographies or on a unit
economics basis can be a strong indicator that
reach and maximize its your company is on the right track and has a solid
potential for growth, while foundation for continued growth. Also, having a
clear plan for how to use additional funds to
minimizing potential risks further accelerate that growth while getting closer
or disruptions to the to profitability can be a powerful motivator for
investors.

business. In comparison to early stage rounds, you should

begin the fundraising process even earlier, at least
nine, better twelve months before your company's
One of the key distinguishing features of growth cash reserves run out. This should give you
equity rounds is the overall check size committed by sufficient time to find the right investors and
investors. While earlier rounds may involve relatively negotiate more favorable terms, as well as provide
small amounts of funding, growth equity rounds a buffer in case of unexpected delays to a) start to
typically involve much larger investments, often in pursue the M&A route in parallel if the fundraise
the tens or hundreds of millions of dollars. This looks to be unsuccessful b) take measures to try to
reflects the fact that the company is expected to become profitable.

have a proven track record of success and is now

looking to accelerate its growth.

There are two key factors that

Another important factor that distinguishes growth typically drive fundraising for later
equity rounds is the type of investors involved.

stage companies: achieving

While earlier rounds may be dominated by angel significant milestones since the last
investors and early-stage venture capital firms, round, and having a clear plan on how
Series B and C rounds often involve growth equity to use the funding to continue scaling.
firms and crossover funds, in addition to multi-stage
venture capital firms.

8
The Handbook for Series B and C Fundraising

Defining Series B and C fundraising

What are investors looking for in a

Series B and C investment

As companies mature and progress through different rounds of funding, the return expectations of
growth capital investors tend to decrease accordingly.

In the earlier stages, such as seed or Series A This could involve ramping up the sales
rounds, investors are often willing to accept a organization or expanding into new markets, while
higher level of risk in exchange for the potential for maintaining a healthy profit margin. Other factors
a >10-20x return on their investment.

that contribute to healthy unit economics include

high customer lifetime value, low customer
However, as companies move into Series B and C acquisition costs, and efficient use of resources.
rounds, investors typically have more information Overall, good unit economics are a key indicator of
about the company's progress and are able to a company's ability to generate sustainable revenue
evaluate its economic potential more accurately. and achieve long-term success. 

This means that they may calculate with a more

modest base case return on their investment, Long-term, investors will also be looking for
typically in the region of 4–5x (~25–30% IRR), next indications of a high operating leverage, meaning
to the still remaining potential to hit an outlier with that your company can scale its revenues without
higher upside

incurring a proportional increase in operating

expenses (OpEx). Subsequently, as revenue grows,
At this point, especially at Series C, key areas of the your company's operating income grows, leading to
business should have been de-risked to a larger greater profitability and potential for expansion.
degree. This includes, for instance, product Typically, software businesses are particularly
development and customers’ willingness to pay for prone to a high operating leverage, as variable
that product. 

costs are usually low, while gross margins tend to

be high.  

Hence, at later stages, investors may be more

interested in ensuring that the company is able to We will dive into the key metrics and ratios, as well
generate steady, sustainable growth rather than as how to calculate them, over the ensuing chapter.
relying on high-risk, high-reward strategies.

Typically, investors will be analyzing a range of

these indicators to form a holistic opinion on the
While a strong top-line growth has been sufficient investment target.
to raise big Series B and C rounds in the past, in
today’s current market environment, investors will
want to see a clear path to profitability in the Healthy unit economics are a key
foreseeable future. 

indicator to determine whether a

business has a clear path towards
Ideally, a company with good unit economics profitability.
should be able to scale its operations without
sacrificing profitability.

9
3

The metrics
investors are
looking for

10
The Handbook for Series B and C Fundraising

The metrics investors are looking for

Growth vs profitability benchmarks

This chapter evaluates and contextualizes the most relevant financial metrics as well as storylines for
Series B and C companies in this current market environment.

As described in the introductory remarks, 2022 marked a paradigm shift for many tech companies, where
“growth at all costs” became significantly less important and instead a new focus on profitability took hold.
While top-line metrics are still very important when evaluating start-ups and scale-ups, the focus of
investors has significantly shifted to metrics further down the P&L.

Top-line Growth (YoY ARR growth)

Formula Benchmark

EoP ARR / prior year EoP ARR Great 3.0x Good 2.0x-3.0x Subpar <2.0x

* Top quartile performance corresponds to sample of companies with USD10M - 30M in ARR
Top-line revenue growth is the most fundamental growth metric as it simply compares the lagging 2 1

months performance of the business. eedless to say, this metric deserves a lot more nuanced
N

observations e.g. distribution of growth etc. but nevertheless serves as the ma or indicator of overall
( ) j

company performance for high growth firms.

N et ollar Retention Rate ( R

D ND )

Formula Benchmark

( BoP ARR + e pansion ARR - gross churn ARR

x ) Great 30
>1 % Good 100 30
–1 % Subpar < 00
1 %

/ BoP ARR

* erformance corresponds to companies with USD10M - 30M in ARR

P

Net dollar retention is a metric that is core to every SaaS investor s and operator s toolkit because recurring
’ ’

revenues sit at the heart of every SaaS business. ence, why investors closely monitor the performance of
H

this metric, and even more so because valuations are closely correlated with the degree of recurring
revenues. n turn, lower retention impairs your customer lifetime values and puts more pressure on sales
I

organi ations to outgrow customer churn

z .

The shift founders are having to make in order to prioriti e efficient growth means startups have become
z

more focused on the preservation of their cash reserves in anticipation of the challenging fundraising
markets. This ultimately triggers a conservative cost policy e.g. reducing a at the e pense of costly
( C C) x

growth measures e.g. increasing ARR . uring times of low interest rates and remarkably high multiples,
( ) D

there was a strong incentive for many companies to add every possible dollar of top line growth, even if
this was only achievable through e cessive spend on marketing. The reason for this was that the
x

incremental increase in valuation outweighed the marginal costs of fueling that unprofitable growth.
11
The Handbook for Series B and C Fundraising

The metrics investors are looking for

Growth vs profitability benchmarks

Net Magic Number
Formula Benchmark

( current Q ARR - prior Q ARR ) / prior Q S&M Spend Great >1.5x Good 1.0-1.5x Subpar <1.0x

* Performance corresponds to companies with USD10M - 30M in ARR

Regardless of the fact that Net Magic Number heavily depends on the typical sales cycle of each specific
industry, it is still regarded as a solid approximation of your company’s ability to acquire customers
efficiently. 

A magic number above 1.0 basically implies that you, at minimum, earn back your customer acquisition
costs within one year. Meaning, ceteris paribus, your company should be earning money on that customer
going forward. However, it is important to highlight that by calculating the magic number, you do not
differentiate whether revenue comes from new business or existing customers. Hence, you cannot infer
whether your growth is fueled by existing customers that spend more with you or whether you are
successful in attracting new customer spend. Also, it should be noted that the net magic number is often
higher for companies with a bottom up sales than a top-down sales approach, which is referred to above.

Rule of 40 (esp. relevant for Series C+)

Formula Benchmark

YoY ARR growth + FCF margin Great >80% Good 40-80% Subpar <40%

* Performance corresponds to companies with USD10M - 30M in ARR

To showcase the interplay between growth and profitability, you can use a metric called the Rule of 40. 

Many growth investors use this ratio to evaluate the tradeoff between growth (measured by new ARR
added per quarter) and profitability on a free cash flow basis (approximated by the free cash flow
margin).  

Generally speaking, the Rule of 40 is expected to decline as companies become larger and top-line growth
decelerates. However, top performing firms continue to exceed 40% irrespective of their scale.

When it comes to profitability on an operating basis, it is important to highlight that most successful
companies typically exhibit a clear evolution towards better profitability over time. The pace of this
development is a function of its marginal profit share of every dollar of revenue generated. Meaning, when
looking at the path to profitability for a later stage company, a closer look at how operating margins evolve
over time is important. Typically, this involves an analysis of all three major categories of operating
expenses of a tech company (sales & marketing, R&D and general & admin).

A useful indicator of this ratio is the incremental profit margin of a business, which depicts the marginal
increase in operating profit that is created with every additional dollar in revenues.
12
The Handbook for Series B and C Fundraising

The metrics investors are looking for

Growth vs profitability benchmarks

Incremental Profit Margin
Formula Benchmark

( EoP operating profit - BoP operating profit ) / Great >40% Good 10–40% Subpar <10%
( EoP net revenues - BoP net revenues )

* Performance corresponds to companies with USD10M - 30M in ARR

The incremental profit margin is a metric that indicates the rate at which revenues are being converted
into operating profit. An incremental profit margin equal to or greater than 40% is considered top-notch,
while a share of roughly 20% or above is indicative of a good performance. Conversely, a trend of 10% or
lower warrants a detailed analysis of the cost structure of your business. 

One can also argue that S&M expenses can be viewed as an investment in future growth for business
models and products with strong revenue expansion. Hence, it makes sense to evaluate operating profits
excluding sales and marketing expenses to get a better view on the operating leverage of a business. 

This relationship is best approximated by the pre-S&M profit margin, which focuses on the fixed cost
components of a company’s P&L.

Pre Sales and Marketing Operating Margin

Formula Benchmark

( EoP operating profit + EoP S&M expense ) Great >40% Good 15–40% Subpar <15%
/ EoP net revenues

* Performance corresponds to companies with USD10M - 30M in ARR

A pre ale mar eting operating margin of 20% or above is indicative of a sound financial condition for a
-s s & k

company, as it suggests sufficient funds are available to allocate towards S&M related expenses. Even
more so, a pre-S&M margin of 40% or higher is regarded as best in class. But similar to the incremental
profit margin analysis, it is most crucial to observe the pre-S&M profit margin s trend over time rather than
'

ust the absolute value to ensure a healthy growth tra ectory.

j j

1 3
The Handbook for Series B and C Fundraising

The metrics investors are looking for

Capital efficiency benchmarks

In addition to showing strong fundamental profitability metrics and a healthy growth trajectory, you also
need to position your company well when it comes to capital efficiency. This ultimately means that you
need to pay close attention to how much money your company spends on acquiring your marginal
customers.

Some businesses make the mistake of estimating

LTV as the present value of revenue or gross
margin, instead of considering net profit per
customer over its lifetime. To calculate LTV
correctly, businesses first need to calculate
Investors like to use the revenue per customer, contribution margin per
LTV/CAC ratio as a customer, and the average lifespan of the
customer. To calculate contribution margin, simply
financial metric to subtract all variable costs that are associated with
servicing a customer (e.g. operational costs, selling,
evaluate the long-term admin) from the revenue per customer. To get to
profitability of a LTV, you then need to multiply this contribution
margin by the average customer's lifetime, which is
company's customer calculated by dividing 1 by your monthly churn rate.

acquisition strategy. A high LTV/CAC ratio indicates that a company is

generating more revenue from a customer than it
costs to acquire them, which is a must for the long-
However, CAC itself might differ, depending on term health and profitability of the business.
which definition is being applied: Conversely, a low LTV/CAC ratio may indicate that a
company is spending too much on customer
Blended CAC refers to the cost of acquiring acquisition or failing to generate sufficient revenue
customers through a combination of organic and from its customers.
paid channels
Paid CAC only considers the cost of acquiring
customers through paid channels
Fully-loaded CAC encompasses all costs
associated with acquiring a customer, including
labor costs related to marketing, sales, and
other related activities.

Fully-loaded CAC is the most commonly looked at

and evaluated by investors, as it usually paints the
most realistic picture of the cost to acquire a
customer.

14
The Handbook for Series B and C Fundraising

The metrics investors are looking for

Capital efficiency benchmarks

LTV/CAC
More relevant from Series B onwards compared to earlier rounds, as more historical churn rates are available
Formula Benchmark

( Avg. monthly revenue p. customer / Monthly churn ) Great >5.0x Good 3.0-5.0x Subpar <3.0x
/ ( Monthly S&M expense / # of net new customers )

* Performance corresponds to companies with USD10M - 30M in ARR

Besides indicating the ability to grow capital efficiently, LTV/CAC gains in relevance as lifetime value is
calculated on the basis of historic churn rates. As a company matures, these become more and more
reliable and hence a valuable metric for investors to track. 

Another way investors like to track how efficiently your company is able to acquire customers is CAC
payback. It measures the time it takes for a company to recoup the cost of acquiring a new customer. It is
calculated by dividing the total cost of acquiring a customer by the average gross margin per customer
over a specific period. For example, if a company spends $1000 to acquire a new customer and that
customer generates $100 in gross margin, the CAC payback period would be ten months (i.e., it would take
ten months for the company to recoup the cost of acquiring that customer).

CAC Payback Period (fully loaded)

Formula Benchmark

Avg. CAC per customer / Avg. MRR per customer * gross margin % Great <12m Good <18m Subpar >18m

* Performance corresponds to companies with USD10M - 30M in ARR

The CAC payback period is an essential metric for evaluating the effectiveness of a company's customer
acquisition strategy.
A shorter CAC payback period indicates that a company is breakeven with its customers more quickly
A longer CAC payback period may indicate that a company's customer acquisition costs are too high or
that it is taking too long to generate significant revenue from its customers.

By tracking the CAC payback period over time, companies can identify trends and adjust their customer
acquisition strategies to improve their overall profitability. Compared to LTV/CAC, even in later rounds CAC
payback is still sometimes regarded as the more “honest” metric, as it does not rely on assumptions on
future churn rates but can be easily calculated based on historical data. It’s also fair to say that it is
generally longer in enterprise vs. shorter in SME facing SaaS companies.
15
The Handbook for Series B and C Fundraising

The metrics investors are looking for

Operational efficiency benchmarks

ARR per FTE
Formula Benchmark

EoP ARR / # of EoP FTEs Great >$180,000 Good $130,000 – $180,000 Subpar <$130,000

* Performance corresponds to companies with USD10M - 30M in ARR

The ARR/FTE ratio is used to evaluate the revenue-generating efficiency of a company's workforce. It is
calculated by dividing the company's annual recurring revenue by the number of full-time employees
A high ARR/FTE ratio indicates that a company is generating a significant amount of revenue per
employee, which is generally a positive sign for the business
A low ARR/FTE ratio may indicate that a company is not generating enough revenue per employee,
which could be a sign of inefficiency or poor productivity.

By tracking the ARR/FTE ratio over time, companies can identify trends and adjust their workforce and
revenue-generation strategies to improve their overall profitability. This metric is particularly useful for
software-as-a-service (SaaS) companies, where recurring revenue is a key component of their business
model. It goes without saying that comparing these ARR/FTE ratios on a global basis makes little sense.
However, founders should be concerned with this metric while comparing it with their direct competitors
that are offering similar products and services in the value chain.

Burn Multiple
Formula Benchmark

Net Burn / Net New ARR Great < 0.9x Good 0.9-1.7x Subpar > 1.8x

Lastly, it is worth looking at the single most important metric when it comes to fast-growing companies in a
capital constrained market environment: Burn Multiple.

Very simply, when your company is making one incremental dollar of total net new ARR for every dollar of
cash spent, you are in a really solid position and your burn ratio is exactly 1. Exceptional burn ratios are
below 0.9x in today’s environment. On the contrary, you should be concerned if your net burn ratio eclipses
1.8–2.0x which indicates that you are potentially losing 1 dollar net in cash on every additional dollar your
company turns over.

This metric is actually a rather simple yet effective measure to keep track of your company's capital
efficiency. The truth however is also that the absolute thresholds for what is considered good vs. bad shift
meaningfully with the market sentiment. While just 18 months ago a net cash burn of 2.0x was maybe
considered in the range of what investors were willing to accept, the same ratio today would be considered
alarming at this stage.
16
4

Investor
outreach and
due diligence

17
The Handbook for Series B and C Fundraising

Investor outreach & due diligence


Identifying potential investors and
managing the process
After covering the most relevant financial and operational metrics for businesses and later stage
companies, we want to provide guidance on how to manage your due diligence and investor outreach
process. Every company faces unique nuances, so this should be interpreted as a rough guideline more
than anything else.

At a very fundamental level, it is important to map If you don’t have inbound and a relationship already,
out the investor landscape for your upcoming introductions will always provide a positive signal
fundraise well in advance of the actual event. This and severely improve the chances that your
means building relationships through informal and fundraise gets sufficient attention from external
non-fundraising related interactions, which ideally investors. In later stage growth rounds, this is
results in a range of investors that you like. Here, it however usually less of a problem, since there is an
is also imperative to do your own research on established base of existing investors that actively
different investment firms to understand if your help on getting follow on funds attention.

company fits into the investment criteria of such a

firm or whether conflicts with existing portfolio When looking at alternative outreach options apart
companies exist. from friendly introductions, you should aim for few,
personalized outreaches. It is instrumental to
For a proper fundraising process, identify the person at the investment fund who is
best suited for your business model (e.g. the
you should entertain a minimum of partner that is specialized in your industry) and
20 funds on your shortlist. email them directly. Always make sure to really
personalize your message and explain why you're
After having compiled a list of potential partners, it reaching out to them specifically. In this context, it's
makes sense to segment these and prioritize by important to avoid spraying and praying by cold
ranking the funds in order of preference. Ideally you emailing multiple team members from the same firm.
factor in both, your preferred choice and likelihood This will undoubtedly create confusion among
to convert a fund. This should allow for a more investors and send bad signals as a result.

targeted and well-structured fundraising strategy.

When it comes to approaching the funds, it's best to Most importantly, late stage fundraising processes
do it in waves. Ideally, one can start by testing the tend to take a lot of time (we are seeing companies
waters with several investors that are not in your spend upwards of 6 months in this market
top badge of preferred partners. By doing this, it will environment) and divert attention and energy from
help you refine your pitch and gain insight into how running your business. As a result, you should share
investors perceive your idea. Once you feel more responsibilities on daily operational matters with co-
confident, reach out to the top level of investors founders, or other senior team members.
that you target and work your way down the list
until you've garnered interest from several For operational success, it is best
investors. 

to appoint one person as the key

When it comes to relationship building with potential process owner for the entire
investors and ensuing outreaches, there are several fundraising process.
ground rules that hold true, irrespective of the stage
of your company.
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The Handbook for Series B and C Fundraising

Investor outreach & due diligence


Round dynamics and core expectations
Another very important aspect relates to the overall aim of the fundraise and what specific milestones
and targets are supposed to be achieved with it at what point in time. For Series B and later stage
companies, the timing aspect of an equity round is also important.

Alternatively, you can also use the momentum after

a successful market expansion or if you generally
have a strong plan on how to scale even faster in
your current market to raise additional capital.
However, as pointed out above, given your
Companies should company’s cash burn you should take great care in
consider raising anytime timing your fundraising activity accordingly and
should not start a process with at least 9-12
the commercial targets months of cash left.

since the last round have Another important topic revolves around the ideal
been achieved and round size of your equity round. In most cases, this
is a function of the market appetite for your
company metrics are in company and the capital requirements your
line with best-in class business needs to ensure >24-30 months runway.

benchmarks Average dilution in earlier rounds typically exceeds

15%. In many growth stage companies, the average
dilution ranges anywhere between 12–15% or
lower. 

The dilution in later rounds obviously will become

even lower. However, it should be noted that some
investors have more rigid ownership expectations
for their investments, and so this ultimately often
ends up becoming a core item of negotiations.

19
5

Mistakes to
avoid in the
current market

20
The Handbook for Series B and C Fundraising

Mistakes to avoid in the current market

Holding onto your previous valuation


Clinging to a previous high valuation can be a major roadblock in securing additional funding.
Investors assess startups based on their potential, market conditions, and growth prospects.
This means, holding onto an unrealistic valuation in the current market can send the wrong
signal to investors, making it difficult to find common ground during negotiations. 

It is essential for founders to be open to a realistic valuation that aligns with the current market
dynamics, and be aware that you will always be able to adjust the valuation upwards as the
round progresses – revising downwards instead is much harder.  

Raising too much capital

While securing sufficient funding is critical for startups, raising too much capital can also be a
misstep. Raising much more money than necessary will dilute the ownership stake of existing
shareholders, as well as making future funding rounds more challenging. Founders should
carefully evaluate their funding needs, strike a balance between growth and sustainability, and
raise an amount that enables them to achieve key milestones without compromising the long-
term health of the business.

Over hiring
As startups secure funding, the temptation to rapidly expand the team can be strong.
Founders need to focus on strategically hiring, identifying the key roles that will drive
immediate value, and defining the key milestones that will signal additional resources are
needed to continue executing on the company’s growth trajectory.

21
6

Putting your
fundraising
process into
action

22
The Handbook for Series B and C Fundraising

Putting your fundraising process into action

Translating the funding process

into an operational plan

The best way to guarantee a successful Series B and C round is to manage the fundraising process with
the same level of execution that you manage the rest of your business with. As a founder, it is your
responsibility to drive the operating plan that aligns your team and outlines a clear path to raising your
next round of funding. So, where do you begin in preparing your operating plan?

Define your target fundraising quarter

Partner with your Finance team to build the cash runway scenario for your business. The objective should be
to confidently determine when your business will deplete its operating cash while allowing you to plan
backward approximately nine to twelve months to the target fundraising date. The best way of doing this, is
by creating operating optionality with three scenarios (e.g. bear, base, bull).

Putting the scenarios together will require integrating a top-down approach with a bottom-up capacity plan
to ensure an output that has stress tested OPEX costs, forecasted revenue figures, and net operating burn. If
your business has recently done this as part of its quarterly or annual planning, it is a good opportunity to
revisit the outcome, challenge the assumptions, and make sure they correctly represent your business today.

Build a plan and start working backwards

Your business now has a target fundraising date based on its operating runway. Now it’s time to build the
operating plan that supports that date and clearly outlines what your business needs to accomplish.

As a founder, it is your responsibility to collaborate with your leadership team to build the operating plan,
define the metrics (for guidance, review the metric benchmarks provided in Chapter 3), and the specific
milestones your business will need to deliver. It is not enough to say you want to be Series B and C ready
by a certain date, your business needs to show the organizational structure required to support that.

For example, if you are looking to raise a Series B in 15 months with $12m in ARR
What is the sales team structure that your business needs? What are the funnel efficiencies that
said team will need to deliver to ensure a cost-efficient commercial process?
If your product needs to have a series of features that will enable you to increase ACV or move
upmarket, what are the product delivery dates?
What does your organizational design look like, and what is the impact this will have on your
operating runway?

A good operating plan provides clear strategic context, the organizational structure, and the milestones
that support the timely execution of your company strategy (which underpins your fundraising target
date). It also becomes a fantastic artifact to share with your investors, and the broader company to drive
alignment as well as focus.

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The Handbook for Series B and C Fundraising

Putting your fundraising process into action

Translating the funding process

into an operational plan

What gets measured, gets executed
After the plan is set, you now need to be proactive and make sure you are driving performance
accountability against the operating plan with monthly reviews. A monthly cadence will allow you to track
progress and iterate as needed. 


To foster a good culture of performance accountability, make sure everybody in the company has access
to the metrics that matter. As a founder, it is even more important that you have real-time visibility on your
financial and operational performance. This will give you the opportunity to take advantage of any
opportunity that arises, or be able to quickly correct any deviations from the plan.

Once you have an operating plan, measurements on that plan, you need to consistently pause and find
opportunities for improving, re-forecasting (looking at the impact on your runway), and iterating.

Turn your operating plan into a fundraising plan

You have executed against your operating plan, successfully iterated when needed, and delivered the
milestones you established. Now, as your target fundraise approaches, simply translate the metrics and
milestones of your operating plan into the core “fundraising metrics” and funding narrative. Your track
record of performance will become the foundation of your data room, investor conversations, and drive the
initial momentum of your fundraising process.

The building blocks of operational execution

Plan Execute On Track

24
The Handbook for Series B and C Fundraising

Drive operational success

with Abacum
The complexity of managing a

fast-growing company and

consistently delivering against your
operating plan is not an easy feat. 

Therefore, it is no surprise that during

the period leading up to fundraising
many startups may lose focus as they
try to scale in many different directions
(e.g. operations, company building,
growth, fundraising). Without clear
alignment and performance reporting,
the operational plan and burn rate may
be overlooked and potentially put the
fundraise target date at risk.

This is why we built Abacum. 

Abacum is the FP&A automation platform that acts as a central hub for founders, finance teams, and
operators to build and execute on the operating plan that translates into a successful round. 

At Abacum, we have seen firsthand how behind the success of any Series B or C round lies a consistent
track record of 12+ months of operational execution. With Abacum companies can:

Connect their operational plan and data Ensure accountability of their operating plan
systems to drive real-time reporting of their with structured workflows that help the
financial and operational metrics, in one leadership team seamlessly review
single place, and always tracked against performance and take corrective actions that
target benchmarks. put metrics back on track when needed.

Deli er faster insights to take advantage of

v T ranslate their operational success into the
every opportunity with bottom-up or top fundraising data room that immediately
down forecasts, scenario analysis, vendor creates alignment with investors, automatically
budgeting, or headcount planning. includes the custom metrics that support the
funding narrative, and clearly demonstrates

Series B and C readiness.

G et a product tour
7

Conclusion

26
The Handbook for Series B and C Fundraising

Conclusion

The current economic climate has had a significant impact on growth-stage companies, which have been
more adversely affected than early-stage companies due to the closer proximity to public markets. 

In practice, this means that investors in Series B and C companies have shifted from a focus on “growth at
all costs” towards favoring capital efficiency and outlining a clear path to profitability. While top-line metrics
like YoY revenue growth are still important, investors have started looking at metrics further down the P&L
with metrics such as burn rate and CAC payback becoming even more prevalent. In addition, investors have
generally become more discerning and are increasingly requiring downside protection and minimum return
thresholds.

To succeed in this environment, companies should prioritize capital efficient growth, minimize burn rate,
the execution of their operational plan, and build relationships with investors who share their long-term
vision. By adopting the strategies shared in this handbook, companies can navigate the current economic
climate successfully and position themselves for long-term growth.

Abacum is the leading FP&A Founded in 2003, Creandum is a

automation platform to drive efficient leading pan-European early-stage
venture capital firm. The fund’s
growth with faster revenue forecasts, portfolio of 120+ companies includes
scenario analyses, tighter cost some of Europe’s most successful tech
controls, and stakeholder companies across a wide range of
accountability.

industries, including Spotify, Klarna,

Depop, Kry, Trade Republic, Pleo,
Leading companies like Factorial, Tier, Factorial and Neo4j. Today, every sixth
ezCater, Leapsome, and Yoco are using company is a unicorn.

Abacum to drive operational execution

and make better decisions.

Creandum's advisory teams are based

in Stockholm, London, Berlin, and San
Learn more at www.abacum.io Francisco and offer extensive
operational expertise to support the
funds’ portfolio companies from seed
to exit to become global category
leaders.

Learn more at www.creandum.com.

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