Raising Series A funding is a significant milestone for any startup.
By this stage, you’ve moved past the idea and early validation phases, demonstrated a product-market fit (PMF), and are ready to scale your business.
But securing Series A funding is not just about having a great product or service; it’s about proving that your business has the potential for massive growth and presenting a compelling case to investors.
How to Raise Series A Funding?
This guide walks you through everything you need to know about raising Series A funding: from understanding who it’s for, to preparing your pitch, finding the right investors, and negotiating terms. Whether you’re a first-time founder or a seasoned entrepreneur, these actionable steps will help you navigate the process with confidence and clarity.
1. Who is Series A for?
Series A funding is for startups that have outgrown (raised) the seed stage and are ready to scale. Typically, these startups have:
A proven (working) business model.
Consistent metrics that demonstrate massive growth potential.
A clear understanding of their target market.
Typical Round Size: $10 Mn to $50 Mn.
Metrics Speak Loudest
Metrics are the lifeblood of Series A fundraising. Investors want to see solid, quantifiable proof that your business is growing and has room for exponential growth.
Here are the key metrics to track and improve:
Revenue: Aim for Annual Recurring Revenue (ARR) above $1 Mn.
Gross Margins: Aim for at least 30%.
Burn Rate: Your burn rate should ideally be lower than your revenue, showcasing efficient capital management.
Stickiness: Ensure users return frequently (high retention) and stay engaged with your product.
Tools to Set and Track Metrics
Use tools and frameworks to keep a close eye on key performance indicators (KPIs). Some critical metrics include:
Quick Ratio: For every $1 lost to churn, aim to add $3-$4 in new business.
Revenue Growth: Be on track to triple your sales year-over-year.
Monthly Active Users (MAU): Ensure user activity is consistent and growing.
Activity Expansion: Show increased engagement or spending per user.
Check out: Startup Metrics for Series A.
Testing and Iterating
Going from idea to Product-Market Fit, and preparing for scale requires constant testing and optimization. Leverage comprehensive planning and execution platforms to ensure that every action aligns with your goals. Fundraising is no different - test, refine, and perfect your pitch as you go.
2. Who Should You Raise From?
Identifying the right investors is crucial. If your seed-stage lead investor has the capacity to participate in Series A, consider their involvement. However, not all seed investors move to Series A, so you’ll likely need new partners.
Key Insight: The average Series A partner leads just 1-2 deals per year out of 100s they evaluate. Finding the right match is about quality, not quantity.
3. Building a Target Investor List
Research is your best friend when it comes to targeting Series A investors (with the best domain profile for your startup).
Create a detailed list of potential VCs and partners, and include the following:
Fund Name: Who are they?
Tier Level: Are they top-tier or niche specialists?
Primary Contact: Who’s your point of entry?
Focus/Thesis: Do they invest in your sector or business model?
Warm Introduction: Can your seed VC or network (preferably their portfolio startup founders) provide a strong intro?
Connection Status: Are they a first-degree connection or a few degrees away?
Track Record (Why them): What similar startups have they funded?
Sort Through the List
Once your list is ready, narrow it down:
Exclude firms that haven’t led Series A rounds recently.
Remove investors backing direct competitors.
Highlight VCs active in your industry or location.
Personalized Outreach
Dig deeper into each investor’s background - their interests, social media activity, and portfolio companies for cues if they're the right fit.
Use this information to craft personalized pitches that resonate. Remember, investors want to see alignment between their expertise and your startup’s needs.
4. Time to Fundraise
Fundraising is a full-time job. As a founder, plan to dedicate at least 50% of your time over 6 months to secure Series A funding. Delegate other responsibilities to your team to free up bandwidth.
5. Perfecting Your Deck and Memo
A polished pitch deck and memo are your entry tickets to serious investor discussions. Be ready to present both at a moment’s notice and ensure they are clear, compelling, and data-driven. Your Series A deck should build on the seed-stage format but with more depth in these areas:
Market Size and Opportunity.
Product Roadmap and Scalability.
Traction and Growth Metrics.
Invest time in your deck and its design. Tell a story. Don't overload it, keep it max 12 slides.
Short Memo as a Teaser
A concise memo can set the stage before meetings. Use it to:
Provide context for your pitch, and generate interest.
Build excitement about your milestones and traction.
Keep it brief: 1-3 pages with a high-level overview (bird's eyeview).
Memo Structure
Brief Introduction
Elevator Pitch (executive summary)
Problem, Product, Competition
Traction Highlights
Vision and Opportunity.
Why You’re Raising Now.
Keep it high-level (at 10,000 fe;et) yet informative - enough to hook investors.
6. Valuation Goals
Be prepared for equity dilution in the range of 15-30%. The amount you raise will impact your valuation, but it’s more important to focus on finding the right partner than chasing the highest valuation.
US startups typically raise $6Mn-$18Mn in a Series A round with post-money valuations ranging from $38Mn-$90Mn, and diluting 15%-25% - Carta, Q3-2024.
Use our 'Due Diligence Toolkit' to Retain Equity & Control. Negotiate Better Terms. Avoid Over-Dilution!
7. Starting Outreach
Once your materials are ready, begin scheduling meetings. The best months for Series A fundraising are typically October, February-April, and June when VCs are less busy. Use warm introductions from your network to open doors. Your network is your net worth. Build it early, even before you need it, and leverage it when you do.
8. Nailing the Pitch Meeting
Here’s a typical timeline for a 9:00 AM pitch:
8:50: Set up the projector and test your equipment.
9:00: Begin with a crisp reminder of what your startup does.
9:02: Share your personal bio to build rapport.
9:15: Dive into your pitch deck.
9:30: Field hard questions with confidence and clarity.
Extra Points to Consider
Be: Friendly, confident, and a good listener. Open to feedback and humble in your approach.
Avoid: Arrogance or overpowering behavior. Being dismissive of questions or concerns.
9. Term Sheets
Your goal is to secure multiple term sheets. Review them carefully with your board and legal team. Speak to founders who’ve worked with the VCs you’re considering to understand their long-term fit.
Pro Tip: It’s not just about valuation - prioritize finding a partner you can trust to support your vision for years to come.
Conclusion
Raising Series A funding is a challenging yet rewarding journey. It’s your opportunity to find partners who believe in your vision and are ready to help you scale. By preparing thoroughly, tracking key metrics, and targeting the right investors, you can position your startup for success. Remember, fundraising is a marathon, not a sprint - stay patient, persistent, and focused on building a lasting company.
Modified content of Sean R Neary.
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