Raising a Series B round means your business is growing fast and serious investors are paying attention. By this stage, your business model is proven, your team has expanded, and you’re bringing in meaningful revenue. Series B funding is designed to help businesses scale beyond the startup phase, but closing a round of this size means tighter legal checks and more complex documents.
In this article, we’ll explain what Series B funding is, when companies typically raise it, what legal areas to focus on, and how working with the right legal team can help keep the process smooth and investor-ready.
What is Series B funding?
Series B funding is typically the third stage in a company’s investment journey, following pre-seed funding / seed funding and Series A. It’s designed to help businesses that already have traction scale further, often nationally or internationally.
The size of a Series B round varies depending on the sector and growth model, but in the UK it often ranges from £10 million to £30 million. This type of investment usually comes from later-stage venture capital firms, growth funds, or strategic investors. These investors will expect to see strong financial performance and long-term potential.
At this stage, investors are backing a company that is already working at scale and now needs serious capital to grow faster.
What is Series B funding used for?
Where Series A is often about building out the business model, Series B is about expanding it. This funding is typically used to:
- Enter new international markets
- Increase headcount across departments
- Scale up operations and infrastructure
- Accelerate product development
- Invest in branding, marketing, joint ventures and partnerships
- Acquire smaller businesses or technologies
Investors will expect you to show how this capital will unlock new revenue, increase margins, or help the business move closer to profitability.
What kind of companies raise Series B?
Companies that raise Series B funding tend to be well past the “startup” stage. These are businesses with:
- Consistent and growing revenue
- A scalable business model
- A defined customer base
- A larger team in place (often 50+ employees)
- Professional financial reporting and governance
You don’t need to be profitable yet, but you do need to show that your business can scale efficiently. You’ll also need to demonstrate that you’re ready to handle the responsibilities that come with larger investors and more complex cap tables.
Legal considerations at Series B stage
Series B funding brings more complexity. The documents are longer, the due diligence is deeper, and the stakes are higher. Getting the legal side right is essential to protect the company, the founders and the investors. Here are some of the key areas to focus on:
1. Share classes and existing rights
By Series B, your company may already have several share classes in place, such as ordinary shares for founders and employees. New Series B investors may want their own class with enhanced rights or protections. You’ll need to review your articles of association and shareholders agreement to make sure they can accommodate the new structure.
2. Investor rights
Series B investors often ask for more detailed protections. These can include more board control, enhanced financial reporting obligations, and stronger veto powers over major decisions. These rights will need to be negotiated and reflected in updated legal documents.
3. Employment matters and option schemes
If your company uses an EMI option scheme (a tax-efficient way to give staff shares), you’ll need to check that it’s still compliant. This is especially important if you’re hitting thresholds around asset value or the number of employees. Investors will also want to see that your key hires have signed employment contracts, IP rights are protected, and the option pool is properly accounted for on the cap table.
4. Regulatory and compliance
Larger investors will run a full compliance check. This includes GDPR/data protection, Companies House filings, sector-specific licences, anti-money laundering procedures (if relevant), and insurance coverage. If any of this is missing or out of date, it can slow down or even derail the funding process.
5. Due diligence and disclosures
At Series B, due diligence is often handled by professional advisers on both sides. You’ll need to share documents through a secure data room and prepare a disclosure letter that sets out anything that might limit or qualify the warranties being given to investors. Having these documents organised in advance helps build trust and avoids delays later.
Why experienced legal support is essential at Series B
Series B investment can be transformational, but it also introduces new risks. You may be negotiating with multiple investors, balancing requests from earlier shareholders, and working to a tight deadline. The legal documents are longer, more detailed, and full of terms that need careful explanation.
Working with a specialist law firm ensures that your company structure, investor rights and governance are set up properly. A good legal adviser can also help manage negotiations, spot red flags early, and keep your deal on track.
At JPP Law, we support fast-growth businesses through every stage of funding. Our team has handled everything from seed rounds to late-stage investment, so we know what’s needed at Series B and what can go wrong. We work efficiently, explain the terms clearly, and focus on protecting your long-term interests while getting your deal done.
Thinking about Series B?
If you’re preparing to raise Series B, now is the time to get your legal paperwork in order. From reviewing existing agreements to negotiating new terms and managing the due diligence process, JPP Law can help make sure your company is ready for the next stage of growth.
Get in touch to book a free consultation with one of our solicitors. We’ll talk through your plans and explain how to prepare for a successful raise.
You may also be interested in:
The First Four Stages of Funding Rounds: What You Need to Know
Legal Preparation for Pre-Seed Funding
Legal Preparation for Seed Funding
Legal Preparation for Series A Funding
Startup Funding Rounds – Advice and Preparation
Advanced Subscription Agreements: A Tool for Managing Valuation Uncertainty
Convertible Loan Notes: The pros and cons when it comes to raising business finance
Crowdfunding Opportunities for Startups and Scaleups in the UK
UK Startup Funding Options and the Associated Legal Considerations
The Pros and Cons of Venture Capital Funding
Peer-to-Peer Lending: Advantages and Disadvantages
Funding alone is not always enough to ensure startups thrive
