Definition
Series A
Series A is a startup's first major priced venture round, raised once it has product-market fit and is ready to scale.
At Series A, institutional venture capital funds lead the round, conducting formal due diligence and negotiating a term sheet with a liquidation preference, board seat and protective provisions. The capital funds scaling of the team, marketing and operations. Valuations are set on a pre-money and post-money basis.
Series A is a key inflection point: many startups that raise seed never reach a Series A. In India, domestic and global VCs compete for promising Series A deals, and the round usually brings the first independent director or investor director onto the board.
Related terms
- Series BSeries B is the funding round a startup raises to scale a proven business model, typically larger than Series A.
- Term SheetA term sheet is the non-binding document that sets out the key terms of a proposed startup investment before definitive agreements are drafted.
- Liquidation PreferenceA liquidation preference gives preferred investors the right to get their money back (or a multiple of it) before common shareholders in an exit or wind-up.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.