The Series A may be the new Series B, but as first round venture fundings have flat-lined over the past year, investors are increasing their bets on B rounds. Indeed, the dollar value of Series B rounds in Q2 was the highest of any quarter in the past decade, according to CrunchBase.
These B rounds are also proving less difficult to raise, despite what some believe to be a Series B crunch. In fact, the number of startups to make it to a B round has steadily increased each quarter since the end of 2012.
This is in contrast to the prevailing trend at the end of 2013, when a flurry of Series A deals made the subsequent round look much more like the ‘hardest round to raise‘. Since the start of 2013, the number of Series A deals has increased about 25.5%, compared to the 44.7% increase for Series B rounds over the same six quarters. We took a look at who the winners were.
The second quarter of 2014 included major Series B deals from New York startups Flatiron Health, Birchbox and Squarespace along with Kreditech and Auctionata of Germany.
One of the best places to raise a Series B recently has been in China. In Q2 UCloud, 117go and 51fanli together raised $90M in funding in Shanghai. From Beijing Zhihu, Light Chaser Animation and Zapya raised $62M combined last quarter. The two cities have proven to be fertile ground for growing startups, where the median increase from a Series A round to Series B total trails only London. Since 2007, investors have increased their bets in China with large follow-on rounds rather than betting big in early rounds as seen most notably in Silicon Valley and Boston.
By market, Biotech and Cleantech (unsurprisingly) have drawn the largest Series B rounds. But high-growth startups have been quick to attract follow-on funding despite less capital-intensive business models. Since 2009, E-Commerce companies like BuyWithMe, Bloomspot and 8thBridge have jumped from A to B relatively quickly. Not coincidentally, each company was acquired soon after. Cloud and Curated Web companies averaged just 16.3 and 17.0 months between funding rounds among markets with ten or more companies that received both an A and B round since 2009.
To follow the trends with startups and investors, use the latest CrunchBase data set to take a look for yourself. Download the Monthly Data Export and let us know what you find.
Photo via Flickr user Howard
