TL;DR: Series A and Series B are named rounds of priced equity financing that a startup raises as it grows. Series A typically funds scaling after early product-market fit; Series B funds further expansion of a model that is working. Each round brings capital and new investors in exchange for equity.
Startup equity financing usually proceeds through a sequence of named rounds. After early seed funding, a Series A is generally the first substantial round of institutional venture capital, raised once a company has shown product-market fit and is ready to scale its team and go-to-market. A Series B follows, funding the further expansion of a model that is clearly working, often to extend into new markets or segments. That said, these labels are conventions, not fixed stages. The round name signals where a company sits in its financing sequence, not a precise level of revenue, headcount, or maturity.
Each round is priced, meaning a valuation is set, and investors receive equity at that price. With each round, existing shareholders are diluted, and new investors, often with board involvement and preferred terms, join the cap table.
Venture debt is frequently used alongside the equity journey, and timing matters. Companies with a round of institutional equity and have multiple years of revenue traction behind them are often a strong fit for venture debt: there is demonstrated revenue to underwrite, and a clear reason to preserve equity ahead of the next round. Used this way, a facility can extend runway and fund growth so the company reaches its next priced round on stronger terms, with less dilution along the way. It can also bridge between rounds or reduce the size of an equity raise.
Do I need to have raised a Series A to use venture debt? No. Some growth lenders like Flow Capital underwrite fundamentals like revenue and traction directly, and finance both venture-backed and bootstrapped companies. A company that has never raised an institutional round can still be a strong fit if the fundamentals are there.
Why use venture debt between equity rounds? To extend runway and fund growth with less dilution, reaching the next round, having created more value, which can support a stronger valuation.
Related terms: VC-Backed · Bridge Financing · Equity Dilution · Pre-money / Post-money Valuation · Venture Debt
