Series A Round
What is it?
- Series A represents the first significant external fundraise by a startup.
- The round is usually led by an anchor investor such as a VC fund who sets the terms of the round and is joined by other investors.
- Series A is the most important milestone in a startup’s journey. It is proof that the company has reached product market fit (PMF).
- Series A is a priced round, meaning the existing shareholders and new investors must agree on a pre-money valuation of the company.
- Company issues compulsorily convertible preferred shares.
What to expect?
- Series A fundraise is typically USD 1 million and above and requires the company to issue preferred shares representing 20-30% dilution.
- The company is also required to create an ESOP pool of 10-20% first prior to the issuance of shares. It is common for lead investors to take up board seats in proportion to the investment.
- Transactions documents involved are shareholder agreement, share subscription agreement and change to company’s articles of association.
Who should consider
- Whether be it a tech startup or a traditional company, Series A is a great way to raise growth capital to accelerate product monetization and capture market share.
- It is also an opportunity to start a long-term relationship with investors who will share the long and hard journey to IPO, providing advice and guidance along the way on anything and everything.
- Thus, choosing the right investors for Series A is crucial. A company raising Series A must demonstrate good customer traction and growth trajectory. Generating revenue is helpful to prove so but is not absolutely necessary.
How Can Bayfront Help
Strategy Review
Detailed analysis of the Client and advise on value-adding corporate strategies.
Competitive Benchmarking
Detailed analysis of the Client and benchmark them against Industry standards.
Structuring
Detailed analysis of the Client’s capital structure and advise on the optimal proportion of equity and debt.
Deal Execution Management
Assisting in execution of deal processes, most commonly in the form of capital raising.
Valuation
Helping to navigate through the complexities of transaction, improve transaction execution, and increase the chance of success.
Information Memorandum
For presenting to different target audience such as lenders, new sales relationships, new client relationships.
Governance Review
To determine the specific governance needs of a company and assist in areas which would minimize risks and help achieve business goals.
