If you are in an early stage Founder, the crazy days of 2021 are a distant memory. Money is scarce and the process of getting more is as unstable as ever.
The last few tumultuous years have thrown away the milestones that defined previous Serie A benchmarks. But that doesn’t mean the game is lost. At this year’s TechCrunch Disrupt, three investors shared their perspectives on what’s changed, what works today, and the advice they give to founders looking to raise a Series A.
“As companies mature to seed and Series A, a year and a half ago, if you had a million or even approaching a million in revenue, a Series A would be created in an instant. “That has changed very quickly.” Maren Bannonco-founder and managing partner of January companies, he told the audience. “Now it’s probably more than 2 (million) to 3 million in revenue when those rounds come together in an instant.”
For founders, moving targets can be incredibly frustrating, especially because the reasons are beyond their control. After a remarkable 13-year bull run, uncertainty plagued the market last year, reducing investors’ appetite for risk. Rising interest rates exacerbated the problem.
As a result, Series A investors have pulled back sharply. “What we have noticed in the statistics is that the implementation of Serie A has decreased by 60% over the last year and a half. The amount deployed for Series A was reduced by 25%, from $10 million to $7.5 million. And the number of agreements that are closed is much smaller,” he said. James Curriergeneral partner of nfx.
“Most seed-stage companies were (successfully) based on history, not traction.” Loren Straubgeneral partner of Capital of the Bowery, he said about market conditions two years ago. “I think there’s been a real shift in focus toward traction, momentum and legitimate product-market fit.”
“Understandably, many Series A investors are looking for a higher bar,” he added.
A market full of venture capitalists hasn’t helped either, Currier said. In the ’90s, there were about 150 general partners in the United States, she said. Today, there are more than 31,000 listed on Signal, a network of investors that runs his company.
