Series B

At Series B, companies typically have product-market fit and are scaling GTM. Risk concentrates in growth efficiency, competition, and organizational execution, while pricing becomes more sensitive to market cycles.

How allocators define Series B exposure

Segmentation includes:

• Growth quality: retention and expansion vs acquisition-driven growth
• Efficiency: CAC payback, margin trajectory, operating leverage
• Competitive moat: switching costs, distribution advantage, platform depth
• Governance and hiring: ability to scale leadership and processes
• Liquidity path: strategic buyer universe or IPO feasibility
• Valuation sensitivity: impact of public comps and rate regime

Allocator framing:
“Is this scalable durable growth—or fragile growth that breaks in a tighter market?”

Core strategies

• Lead B: governance and scaling expertise matters
• Growth-sleeve B: crossover-like behavior; must manage liquidity cycles
• Sector-specific B: underwriting deep category dynamics

Evaluation

Conviction increases when managers show:

• repeatable ability to underwrite and scale GTM
• disciplined entry pricing relative to exit scenarios
• governance track record through hiring and scaling crises
• transparent reserves and pro-rata strategy
• evidence from downturn vintages

What slows decisions

• dependence on “growth at all costs” era playbooks
• unclear path to profitability or durable unit economics
• high multiple exposure without downside protection
• crowded sectors with weak differentiation

Misconceptions

• “Later stage means lower risk” → multiple compression and liquidity risk can dominate.
• “Revenue equals safety” → revenue quality and retention matter.

Key allocator questions

• What breaks first if growth slows—retention, pricing, or CAC?
• What is the base-case liquidity path and timeline?
• How does valuation look under conservative exit multiples?
• What is the manager’s plan in a down-round environment?
• How does the manager support operational scaling?