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Ask HN: What is needed for a successful Series A?
A startup I'm advising just closed a successful seed round with enough funding for ~18 months of runway. All eyes now turn towards the Series A, and on figuring out where they will need to be in 6-12 months to raise a successful Series A.
So my two questions are:
1. What are the things VC's need to see in a seed-funded company after 6-12 months of work that enable them to join (or lead) the Series A round?
2. Are there things that typically cause a Series A to fail, that VC's see and it triggers an automatic "decline" decision, that we need to be careful to avoid?
- mchannon 13y agoTraction (customers, preferably paying) are the primary thing investors look for with existing businesses. The less you have need for that series A, the easier it will be to obtain. Beyond that, spend the next few months focusing on your product and market, then if you really want that series A, meet with as many potential investors as you can, but not to pitch; you want a nice competitive round when the time comes. The worst series A failure is a completed one with bad terms.
- SkyMarshal 13y ago>The less you have need for that series A, the easier it will be to obtain. That seems to be the crux of all funding, isn't it, the less you need it the more everyone wants to give it to you. I've heard you need Team, Traction, or Technology, but Team and Technology are really just the prereqs or means to the end for Traction.
- ig1 13y agoProbably a bit late at this stage but it's important to make sure that the seed investors don't own too large a percentage of the company, especially if they have follow-on rights. A messy cap table can kill an otherwise good investment. Series A investors might also want to see your seed deck and see if you managed to achieve what you told your seed investors you'd achieve. In terms of specifics it depends very much on the nature of the business. The expectations of where an enterprise startup vs a social network vs a mobile game are very different. The best thing you can do is benchmark with similar (non-competitive businesses).
- SkyMarshal 13y agoVery good points, thanks. I know the finance co-founder is on top of ensuring a clean cap table, as a messy one, especially with equity owners no longer with the company, can definitely trigger a "decline". And good point about the seed deck too, will make sure to pass that on. I'd like to think everyone is aware of that, but I also suspect we may need to pivot on the way to product market fit.