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
