While the absolute number of Series A transactions is growing faster than Series B rounds, the time between Series A and B rounds has declined to 15.1 months.

Angst and chatter around a venture capital financing crunch at the Series B stage has grown louder across the startup ecosystem. Concerns over a coming ‘Series B Crunch’ primarily revolve around the fact that funding is readily available at both the early stage (which has a glut of early stage and micro-VC investors) and at the late stage for clear breakout companies.

The concern is for the solid companies who are not “crushing it.”

As we’d shown earlier, 2013 saw the largest gap in the number of U.S.-based Series A and B tech transactions in the last six years.


But while the absolute number of Series A transactions in the tech sector is outstripping Series B deal activity, is it also getting harder to raise a Series B?  In other words, (1) what is the follow-on rate between Series A and Series B and (2) is the time between Series A and Series B rounds getting longer or shorter?

Series B Follow-On Rates Over Time

The chart below shows Series A follow-on investment rates across 2008 to 2011 vintages (we did not look at tech startups that received a Series A round in 2012 or later which may still be too immature to evaluate fairly). Series A follow-on rates have indeed fallen since 2008. But it’s worth noting that the drop has not been incredibly dramatic, falling from 55% in 2008 to 50% in 2011.


Time Between Series A and Series B

The more interesting trend emerges when looking at time between Series A and Series B rounds across these vintages.  Tech companies that received a Series A round in 2008 took nearly two years on average before receiving a Series B round. Meanwhile, tech companies that raised a Series A round in 2011 needed just 15.1 months on average to receive a Series B financing deal.

So while the gap between the number of tech Series A and Series B deals has grown, companies getting to Series B are doing it a quicker pace than before.

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  • Mark Harnett

    Interesting article. I created an account to look at the data, but could not find the summary data on your website. Did you use cohorts to calculate the percentages receiving the follow on round? The time for a company in 2008 to reach a B round is now 5-6 years, whereas the 2011 companies have only had 3 years.