Largest Series A Funding Rounds in History

There is no quick or easy way to get equity capital for a business. If you’re successful, however, you’ll have the means to see your business through to its full potential. Series A fundraising rounds are very important to a startup’s development and eventual success. The Series A funding rounds follow a company’s first seed investment and are often seen as a reliable indicator of the company’s future success. Startups often utilize Series A funding to begin implementing their go-to-market strategy, which often includes making a large number of new hires. It is also a vital step for investors who are seeking lucrative stock shares in firms that will be the market leaders of the future. To accomplish all of these, you must have a comprehensive idea about the money involved in series A funding and some of the largest series A funding rounds in history. In this article, we will examine a few of the most noteworthy fundraising achievements in recent years. 

Series A funding rounds

If a firm has made it past the seed stage but is also showing signs of growth in terms of users, income, or views, it may decide to secure Series A round funding to assist propel them to a higher level. Although a proven business model may not be required for Series A funding, a firm should have a strategy for creating one. They must utilize the funds to boost sales as well. Let’s understand Series A funding rounds better.

What is series A funding?

Funding for a company sometimes includes a financing round known as series A financing (or simply series A funding). In its most basic form, the series A round serves both as the second step of the startup financing process and the first stage of the venture capital financing process. A startup at this point has a proven track record but is still relatively new, meaning its most successful years are ahead of it. Venture capitalists tend to have better success with firms in the Series A financing round than with those in later stages of development.

Series A funding is also an equity-based financing option, like seed funding. To raise money, businesses often offer shares to the public for purchase. In most situations, however, anti-dilution clauses are included in series A financing. In most cases, preferred shares are distributed by startups, and the owners of these shares do not get voting rights.

How does series A funding work? 

Series A funding rounds are far more formal than seed money stages. The bulk of this fundraising round’s investors are venture capitalists, and they are ready to wait for the company to finish the verification and valuation procedures before deciding whether or not to participate. So, these procedures kick off any significant series A financing.

The United States had the largest increase (125%) in Series A financing of any major area in 2021. By 2022, however, the United States market had pulled back even farther, by 33 per cent, compared to the rest of the world.

The success of a company’s management and the return on its initial investment are both factors that must be considered throughout a fundraising campaign. A company’s ability to generate future earnings is also reflected in its value, showing how effectively management has planned for the company’s growth. Venture capitalists won’t put money into a firm until after it’s been thoroughly investigated and valued.

Money involved in Series A funding

Series A financing usually ranges between $2 million and $15 million, much more than the seed round’s $1 million. Hence, before committing to a series A investment round, investors will expect more substance than was necessary for the seed round. It also implies fewer overall contributions are made during series A financing rounds due to the larger bite size. This pattern persists through subsequent financing rounds, from A to B and beyond. In general, fewer checkwriters are available to finance a larger round.

It’s also not enough to just have a fantastic concept; today’s entrepreneurs must provide concrete evidence that their venture will be successful. For series A fundraising rounds, a company’s value is typically between $10 million and $15 million.

Benefits of Series A funding

The following is a list of the benefits of Series A funding rounds for your better understanding:

• They have the potential to provide significant financing to your organization.
• As a result of their background and skills, they might be an asset to your firm.
• They may assist you in establishing ties with more investors and possible business partners.
• They may provide you access to useful tools and assistance that will aid in the expansion of your company.
•  They may offer you the chance to sell your firm at a better price than it was originally valued at.

Structure of Series A funding

Due investigation and analysis from institutional investors, as well as the legal fees and costs incurred by the firm to accommodate new investors, make smaller investments less attractive. Seeking angel investment is common practice for startups in need of operating finance but not yet prepared to attract venture financing. Given the price of doing business in industries like software development, data services, telecommunications, etc., larger sums are often unnecessary. Yet, it’s not uncommon for series A funding rounds to exceed $10 million in industries like biotech, electronics, and real estate. Although the fundamental legal and financial structures are the same, the particular terminology, contract terms, and investing practices of each country, industry, and group of investors are unique.

Preferred stocks of Series A represent the initial offering of equity by a portfolio business to a venture capital investor in the United States, often at the seed or initial stage round. IPOs and firm sales commonly convert Series A preferred shares into common stock.

There is extensive coverage of Series A financing rounds in blogs, industry publications, business press, and other sources that focus on the technology sector in the United States, especially in Silicon Valley. Series A funding rounds in non-tech sectors also attract capital from institutional investors like banks and corporations as well as individual investors like wealthy individuals and charitable organizations, although they are seldom covered by the media like those in the tech sector.

Sources of capital in series A funding 

Due to the lack of a public marketplace for their assets, private companies connect with VC firms and investors in private equity through a variety of channels, such as warm introductions from the investors’ existing network of trusted sources and business contacts, investor conferences, and demo days. Companies in the United States are increasingly turning to online marketplaces to raise their Series A round of capital as equity crowdfunding evolves. Together with traditional VC firms, these mixed rounds often include angel, strategic, and capital investors.

Series A funding trends

The average Series A funding round in 2013 was $6 million, with the median being $3 million. The average Series A financing round this year is approximately $20 million, with the median round size being over $10 million. Around $14 million was raised in a typical Series A round in 2020, with $7.5 million being the median.

Global Series A financing increased by almost 100% in 2021 but then dropped by 23% the following year. While Series A funding was down, it wasn’t as bad as Series B and afterwards. Annual declines in financing for series B rounds have been 30%, while for series C and subsequent rounds, the reduction has been 45% in 2022 compared to the previous year.

Nevertheless, entrepreneurs can’t simply stop raising money after the Series A funding round. There is still the rest of the alphabet to go. The prognosis for startups raising at the Series A level in 2022 has not diminished much relative to the magnitude of funding. Nevertheless, given the decline in financing beyond Series A, startups may get trapped until Series B and beyond funding increase in the second half of 2023.

According to Crunchbase, in 2021, more than 5,000 firms received a total of $90 billion in Series A investment, a record high. As of December 11th, only approximately 4,000 firms had received $70 billion in Series A capital this year.

Largest series A funding rounds in history

While higher sums of money are often raised in subsequent investment rounds, the Series A phase is nevertheless crucial for developing businesses. An analysis of Series A financing finds regional differences as well. Let’s take a closer look at the largest series A funding rounds in history.

Get ready for your series A funding with Eqvista!

It may provide a firm with the funds it needs to develop, aid in attracting and retaining top employees, create excitement and anticipation, and show investors the company means business. Get advice from industry experts before deciding to start, to be sure it’s the best option for your business. Our Eqvista platform allows you to efficiently distribute shares and maintain communication with your investors. Get your firm up and going quickly with our assistance in establishing a company. Want to know how? Call us now!