At EchoSign, we raised $8.5m + $1.5m in debt and burned on a net basis $6.5m of that to get to the first $10m in ARR. We went cash-flow positive around $4m-$5m in ARR or so. Different times.
This worked, but looking back on why, it was because (x) the majority of our customers and leads after $1m in ARR or so were acquired from brand, referrals, etc. – $0 CAC, and (y) because we focused sales up to $10m on segments where we had lots of traction. We were late to outbound (probably a mistake with hindsight), and late to segments where we had no traction (probably smart).
We were also fragile this way. We had $1.5m in the bank after going cash-flow positive, but that’s not really enough to invest at the stage. Roughly, you want as much in the bank as your ARR in order to be comfortable forward-investing. Or something close to that.
So $5m wasn’t enough for us. We really needed $10m to get to $10m in ARR with a buffer.