Preparing for Series A: What VCs Really Want

Series A is where things get serious. Here's what you need to raise from top-tier VCs.

The Series A Bar

Minimum Requirements:

• $1M+ ARR (SaaS)
• 3x YoY growth
• Clear product-market fit
• Repeatable sales process
• Strong unit economics
• Experienced team

Ideal Profile:

• $2M+ ARR
• 4x+ YoY growth
• <5% monthly churn
• CAC payback <12 months
• LTV/CAC >3x
• Multiple GTM channels working

Key Metrics VCs Analyze

Growth Metrics

ARR Growth Rate

• Minimum: 3x YoY
• Good: 4x YoY
• Excellent: 5x+ YoY

Month-over-Month Growth

• Minimum: 15% MoM
• Good: 20% MoM
• Excellent: 25%+ MoM

Retention Metrics

Gross Revenue Retention

• Minimum: 85%
• Good: 90%
• Excellent: 95%+

Net Revenue Retention

• Minimum: 100%
• Good: 110%
• Excellent: 120%+

Efficiency Metrics

CAC Payback Period

• Maximum: 18 months
• Good: 12 months
• Excellent: <6 months

LTV/CAC Ratio

• Minimum: 3x
• Good: 4x
• Excellent: 5x+

Magic Number

• Minimum: 0.75
• Good: 1.0
• Excellent: 1.5+

Formula: (Net New ARR / Sales & Marketing Spend) × 4

Quality Metrics

Gross Margin

• Minimum: 70%
• Good: 75%
• Excellent: 80%+

Customer Concentration

• No customer >20% of revenue
• Top 10 customers <50% of revenue

Building Your Story

The Series A Narrative:

1. We Found Product-Market Fit

• Clear customer pain point
• Proven solution
• Customers love it (NPS >50)
• Strong retention
• Word-of-mouth growth

2. We Have a Repeatable Sales Process

• Defined ICP
• Predictable pipeline
• Consistent conversion rates
• Documented playbook
• Scalable process

3. Unit Economics Work

• Profitable at unit level
• Clear path to profitability
• Efficient customer acquisition
• Strong retention
• Expansion revenue

4. Huge Market Opportunity

• $1B+ TAM
• Growing market
• Clear path to $100M+ revenue
• Multiple expansion opportunities

5. World-Class Team

• Experienced founders
• Key hires in place
• Ability to attract talent
• Domain expertise

The Series A Pitch Deck

Enhanced from Seed:

Traction Slide (Most Important)

• Revenue growth chart
• Key metrics dashboard
• Customer logos
• Testimonials
• Case studies

Unit Economics Slide

• CAC by channel
• LTV calculation
• Payback period
• Cohort analysis
• Path to profitability

Go-to-Market Slide

• What's working
• Channel mix
• Sales process
• Marketing strategy
• Expansion plan

Product Roadmap

• Recent launches
• Current development
• Future vision
• Competitive advantages

Competitive Analysis

• Market positioning
• Differentiation
• Win rates
• Barriers to entry

The Fundraising Process

Phase 1: Preparation (8 weeks)

• Build comprehensive data room
• Prepare detailed financial model
• Create pitch deck
• Research target VCs
• Get warm introductions

Phase 2: First Meetings (8-12 weeks)

• 30-40 VC meetings
• Refine pitch
• Build relationships
• Create momentum

Phase 3: Partner Meetings (4-6 weeks)

• Present to partnerships
• Deep due diligence
• Reference calls
• Technical review

Phase 4: Term Sheets (2 weeks)

• Receive multiple term sheets
• Negotiate terms
• Choose lead investor
• Finalize terms

Phase 5: Closing (4-6 weeks)

• Legal documentation
• Final due diligence
• Close the round

Total: 6-9 months

How Much to Raise

Typical Series A:

• $5M-$15M
• 18-24 months runway
• Get to Series B metrics

Valuation Range:

• $15M-$50M post-money
• 20-30% dilution

Use of Funds:

• 60-70% sales and marketing
• 20-25% product development
• 10-15% operations

Choosing Your Lead Investor

Evaluation Criteria:

Track Record

• Portfolio companies
• Success rate
• Follow-on support
• Reputation

Value-Add

• Network and intros
• Recruiting help
• Strategic guidance
• Operational support

Terms

• Valuation
• Board seat
• Protective provisions
• Pro-rata rights

Chemistry

• Do you trust them?
• Will they support you in hard times?
• Do they understand your vision?
• Can you work together?

Due Diligence Preparation

Financial DD

• 3 years financial statements
• Revenue by customer
• Cohort analysis
• Unit economics
• Projections and assumptions

Legal DD

• Corporate structure
• IP ownership
• Customer contracts
• Employee agreements
• Cap table

Product/Technical DD

• Architecture overview
• Security practices
• Scalability plan
• Technical debt
• Product roadmap

Customer DD

• Reference calls
• NPS scores
• Churn analysis
• Use cases
• Testimonials

Common Rejection Reasons

Not Enough Traction

• ARR too low
• Growth too slow
• Churn too high

Poor Unit Economics

• CAC too high
• LTV too low
• Long payback period

Market Concerns

• Market too small
• Too competitive
• Unclear differentiation

Team Issues

• Inexperienced founders
• Key roles unfilled
• High turnover

Timing

• Too early
• Market timing wrong
• VC fund timing

If You Don't Raise Series A

Alternative Paths:

1. Extend Seed

• Raise smaller bridge round
• Get to better metrics
• Try again in 6 months

2. Grow Profitably

• Focus on unit economics
• Grow more slowly
• Bootstrap to profitability

3. Strategic Partnership

• Find strategic investor
• Get distribution access
• Grow through partnership

4. Pivot

• Change target market
• Adjust product
• Find better fit

Success Factors

1. Timing Raise when you have momentum, not when you need money.

2. Preparation Have everything ready before you start. First impressions matter.

3. Momentum Create FOMO by moving quickly and having multiple interested investors.

4. Story Craft a compelling narrative about why you'll win.

5. Execution Keep building while fundraising. Traction is your best pitch.

Series A is a major milestone, but it's just the beginning. The real work starts after you close the round.