Dear SaaStr: When is a Startup Ready to Raise Venture Capital These Days?

First, bear in mind, start-up fundraising has gotten a lot harder than it’s been the past few years.  A lot harder.  The latest Carta data summarizes it well:

But while raising VC capital has gotten harder, the rough rules in B2B / SaaS haven’t really changed:

Seed Round:

  • $10k-$100k a month in revenue
  • Growing 150% annually or more
  • Strong founders, including strong technical co-founder

Series A:

  • $2m ARR or more ($1m if in hot space and growing fast)
  • Growing 100%-150% annually or more
  • Strong customer references
  • No big churn issues
  • Ideally, at least one good VP on the team already

Series B:

  • $4m-$10m+ ARR
  • Growing 100%-150% annually or more
  • Strong NRR, or NRR trending toward strong
  • Strong logo accounts and potentially to break out and win space
  • A few strong VPs and leaders on team
  • Generally, seeing a trend toward more, not less, capital efficiency given today’s world

Reasons start-ups aren’t ready to raise:

  • Growth just not fast enough. Doesn’t really matter why.
  • At seed stage, no strong CTO or technical team isn’t full-time or is outsourced.
  • Churn too high
  • Burn too high
  • Competitors growing faster
  • Already raised “too much” capital

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