Businesses who require or invite investors to invest in the business under the category of Series-C funding, are businesses that are already established, have a good market share, profitable and are developed businesses. Every business is presented through a graph of the business cycle. After reaching its peak, the business tends to contract to a trough. To re-enter the expansion stage, the business needs to expand its product line or service or acquire another company. In Series-C, groups such as investment banks, private equity firms, hedge funds tend to participate in funding. Businesses are valued at more than $100 million. In this stage of funding, businesses tend to raise more $50 million of funding.
Magic Leap secured nearly $1 billion at this stage. Uniphore Pvt. Ltd. raised around $4 million dollars from March Capital Partners as Series-C funding in July 2019 in India. Therefore, there are no hard and fast rules describing what Series C funding is used for or what the minimum dollar amount should be, so even small businesses can reach this funding round.
State of the Business during Series-C Funding
The business is on the stage of expansion and on a fast track to reach its peak. Series-C funding is injected into the business in an effort to receive maximum profits and grow the business as quickly as possible. The groups mentioned above tend to participate in this type of funding as the business already has proven itself and well established in the market. This funding is also done when the business wants to introduce a new product or wants to formulate another form of undertaking under itself. This stage can be considered with the business participating in Initial Public Offer.
Mediums through which the Business receives Series-C Funding
Series-C funding is generally raised by the sale of a preferred share or equity shares. If preference shares are issued, then they are likely to be convertible shares. Moreover, the holders can be offered the right to exchange them for common stock in the company at some date in the future. To some extent, the business receiving Series-B funding can be called or referred to as start-ups, but strictly speaking, the business receiving Series-C funding cannot be referred to as start-ups. They have matured running businesses in a competitive market.
There is a need to get Series C funding right the first time. Many companies end their funding rounds with Series C. Investors who see or interpret that you are on Series D, E, or even F will proceed with caution because any funding rounds after Series C is a strong indicator that your Series C round failed and you need additional funds to try again.
Through the rounds of investment, the original business owners tend to give up more of the company’s shareholding, diluting their own power and position. However, the company has grown at this point and become more valuable with each stage of financing. After Series C funding, the original owners hold a smaller piece of a larger company, but, as ground-floor investors, their shares have ideally increased considerably in value. So while there are more partners and investors to answer to, major decisions likely can’t be made as swiftly or independently as in the past.
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