If you are in early stage Founder, the crazy days of 2021 are a distant memory. Money is tight, and the process of getting more is as precarious as ever.
The past few turbulent years have thrown away the milestones that set the bar for previous Series A’s. But that doesn’t mean losing the game. At this year’s TechCrunch Disrupt, three investors shared their perspectives on what’s changed, what’s working today, and what advice they have for founders looking to raise a Series A.
“As companies matured to raise a Series A, a year and a half ago, if your revenue was a million or even close to a million, the Series A would come together in a heartbeat. That has changed very quickly.” Marine Bannonco-founder and managing partner of January projects, he told the audience. “Now it’s probably more like 2 [million] to 3 million in revenue as those rounds come together in the blink of an eye.
For founders, changing goals can be extremely frustrating – especially since the reasons for this are beyond their control. After a remarkable 13-year rise, uncertainty crept into the market last year, weakening investors’ appetite for risk. High interest rates exacerbated the problem.
As a result, Series A investors declined significantly. “What we noticed in the stats is that Series A publishing has dropped by 60% over the past year and a half. The amount published per Series A has dropped by 25% from $10 million to $7.5 million. The number of deals completed is much lower.” James Curriergeneral partner in NFX.
“The bulk were seed stage companies [successfully] “The excitement of the story, not the drag.” Lauren Stroupgeneral partner in Bowery Capital, he said about market conditions two years ago. “I think there has been a real shift in focus towards traction, momentum and legitimate product-market fit.”
“Understandably, a lot of Series A investors are looking for a higher bar,” she added.
A market crowded with venture capitalists hasn’t helped either, Currier said. In the 1990s, there were about 150 general partners in the United States, he said. Today, there are more than 31,000 companies listed on Signal, a network of investors managed by his company.