Series A Funding — What Investors Are Saying in 2018
2018 is shaping up to be a record-setting year for venture capital. Through the first 3 quarters there has been $84B of venture capital invested, and estimates suggest that number will surpass $100B by the end of the year.The new normal has turned into more capital going to fewer, larger deals. Seed stage investing has morphed into a “seed phase” with more early-stage companies raising their first round later in their life cycle changing what Series A funding means to both companies and investors.
As Semil Shah puts it, with these new trends comes, “a new breed of Series A investor, most of whom arrived at this point by slowly scaling up from smaller, more modest seed funds.” This shift has investors across the industry talking. We’ve laid out some our favorite thoughts below:
Investors on raising Series A funding in today’s market
“Today, Series A investors are now looking for more and more traction before leading large Series A rounds. Institutional seed investors have followed suit — increasingly investing only in companies with some demonstrable success in the market. And because institutional seed investors are funding slightly more mature companies, a new pre-seed category has emerged to fund companies one step earlier.- Rob Go of NextView Ventures
Semil Shah on the significance or raising Series A funding in 2018: “Getting companies from seed to Series A is a really important milestone, a milestone I’ve likened to getting into the graduate school of one’s choice.”
What it takes to raise Series A funding
“So, you think you’re ready to raise a Series A? You have a radical insight that can transform a market, your core value proposition demonstrates strong customer validation of your product, your long-term vision is audacious, and you’re crushing major milestones, which warrants the belief that you have the right team to nail it.” – Sam Haffar of Real Venture
Rob Go on what investors look for outside of strong metrics: “For seed and Series A deals, investors will also need to see a high-potential team with founder/market fit, a large and attractive market opportunity, and a business model with increasing returns to scale. Top-line metrics are indicators of success, not the one bar to clear to raise funding for your startup.”
What it means to raise Series A funding
“It’s by far the most significant stage because it is during this stage that the company must complete a complex transition: from a company with a great offering that could scale to a company with a great offering that is rapidly and predictably scaling.” – Gil Dibner of Angular Ventures
“At a minimum, getting to the Series A de-risks (perhaps temporarily) a seed investment in a world where the shapes of investment outcomes can take a decade or more” – Semil Shah of Haystack Ventures
Series A funding will continue to be a fluid market and change year in year out. In 2018, securing Series A funding is an integral part from growing from “startup” to “unicorn”. To learn more about the journey from growing from Seed to Series A, check out the Founders Forward Blog.