Series A Funding: Metrics, Milestones, and the Story You Need to Tell
A successful Series A lays the foundation for future funding rounds and eventual IPO/exit. A poorly managed Series A funding round raises potential dilution risks early in the startup journey and may act as a hindrance to securing additional venture capital funding in a Series B or Series C round.
Here’s what every SaaS and AI startup founder needs to know for a successful Series A.
Series A Funding in a Nutshell
Series A funding is the first round of institutional venture capital investment that SaaS and AI startups raise. The Series A typically follows a seed round, and capital from Series A is used to scale product, grow revenue, and prove the go-to-market strategy.
During the Series A round, investors give capital in exchange for equity in the company. This equity is typically preferred equity, providing Series A investors with priority repayment (over common stock) and liquidation preferences, as well as board rights.
Typical Milestones Achieved Before a Series A
Winning over Series A investors starts with knowing what they want to see. While there are exceptions to every rule, your Series A fundraising round will be most successful if you wait until after you’ve hit these milestones.
1. Achieved Product-Market Fit
A SaaS/AI startup with a solid product-market fit has strong adoption and retention metrics and high customer satisfaction. As you build your pitch deck, you can speak to your company’s product-market fit by highlighting strong engagement and usage metrics. Series A investors want to see that your product has real, demonstrated value in the marketplace.
2. Demonstrated Scalable Revenue Growth
Potential investors want to see evidence of recurring revenue growth and a repeatable sales process. For SaaS startups, Series A investors typically look for ~$1M+ ARR. Potential investors also want to see that your revenue growth path supports future profitability—that you’re retaining the customers you already have, not just acquiring new ones (which drives up your Customer Acquisition Cost, or CAC).
3. Established a Clear Roadmap for Growth
How are investors going to make money? Potential investors want to see founders outline a clear strategy for how Series A capital will accelerate growth and hit Series B readiness.
Build a Compelling Narrative for Investors
In a Series A, most venture capitalists are looking to invest in startups that will give them a 10x to 15x potential return. Keep that top of mind as you frame the narrative of your company.
Create a sense of urgency by answering the question, “Why now?” How does regulation, buyer behavior, unmet pain for your ideal customer profile (ICP), or tech shifts make the market landscape ripe for disruption?
Make customer pain obvious, urgent, and expensive (if ignored). You can use metrics or real customer stories to highlight the intensity of the problem. Once you’ve done this, it’s time to illustrate how your product—and only your product—has created a unique solution. Are you faster, cheaper, or smarter than the competition? Do you have a data or network advantage? This is the place to highlight any proprietary tech as the hero of the story.
From there, you can transition into the metrics that prove early traction, like ARR, growth rate, NRR, CAC/LTV, or usage depth. If you’re pre-revenue, you’ll want to show high user engagement, pilot conversions, or signed letters of intent (LOIs).
The Anatomy of a Winning Pitch Deck
- Title slide: Company name, tagline, logo, contact information.
- Vision & mission: A clear, bold statement of the company’s long-term goal and the problem you’re solving.
- Market opportunity: Total addressable market (TAM), ideal customer profile (ICP), and why now is the time.
- Problem statement: The pain that exists, who experiences it, and why existing solutions fall short.
- Product & solution: What you’ve built, how it works, key features (especially if AI-powered), and why it’s differentiated.
- Traction & metrics: KPIs like ARR, growth rate, net revenue retention (NRR), churn, CAC:LTV, usage stats, or AI model performance.
- Go-to-market strategy: Your plan for acquiring, converting, and retaining customers.
- Business model: How you make money. This is the spot to break down your pricing model.
- Competitive landscape: Name your competition. Outline your positioning. Show how you’ll win.
- Technology & IP: Architecture, defensibility, proprietary data, and how AI/ML gives you an edge.
- Your team: Founders, key hires, and why your team has founder-market fit.
- Roadmap: The key product and growth milestones ahead.
- Financials & forecast: High-level projections, current burn rate, and cash runway.
- Ask & use of funds: How much you’re raising and how you’ll use it to drive Series B readiness.
Key Metrics to Prep for Series A Investors
When you walk into the room, you want to know your numbers like the back of your hand. Take the time to calculate each of these metrics. Create a cheat sheet for yourself that includes all of them. Commit them to memory. When a potential investor asks about it, you’ll be glad you did.
- Monthly Recurring Revenue (MRR): MRR is the total predictable revenue generated each month from subscriptions or contracts.
- Annual Recurring Revenue (ARR): ARR is the annualized version of MRR, used to show yearly revenue potential.
- Customer Acquisition Cost (CAC): CAC is the average cost to acquire a new customer, including sales and marketing expenses.
- Customer Lifetime Value (LTV): LTV is the projected total revenue a customer is expected to generate over the duration of their relationship with a company.
- LTV:CAC Ratio: A measure of business efficiency that compares the lifetime value of a customer to the cost of acquiring them.
- Gross Margin: Revenue minus the cost of goods sold (COGS). Gross margin indicates how much the company retains after direct costs.
- Churn Rate: Customer churn rate is the percentage of customers (or revenue) lost during a specific time period.
- Net Revenue Retention (NRR): NRR is the percentage of recurring revenue retained from existing customers after accounting for upgrades, downgrades, and churn.
- Burn Rate: Cash burn rate is the rate at which your company is spending capital, usually measured monthly.
- Runway: The amount of time the company can continue operating at the current burn rate before needing more funding.
- Active Users (DAU/WAU/MAU): Daily, weekly, or monthly active users, which reflect user engagement and growth.
- Sales Efficiency: Sales efficiency measures how effectively your sales spend translates into recurring revenue growth.
- Conversion Rate: The percentage of leads or trial users that convert into paying customers.
- Payback Period: The time it takes to recoup the CAC from the revenue generated by that customer.
- Qualified Pipeline Coverage: The ratio of forecasted or qualified pipeline revenue to quota, indicating sales visibility.
What Comes After a Series A
Series A funding will help extend your runway so that you can build and maintain velocity as you prove GTM stickiness. For many SaaS and AI startups, a Series A round will be followed by a Series B, Series C, or even a Series D. These are all investment rounds where institutional investors, like venture capital firms, investment firms, and hedge funds, can invest in a tech company in exchange for equity.
As you pursue growth, it’s important to remember that equity investment is just one element of the capital stack. Non-dilutive financing options can also help you bridge the gap between rounds or extend your runway without giving up control. This mix of equity and debt funding sources is known as the capital stack. Knowing how to leverage it to your advantage is a superpower for founders.
Extend Your Runway With Non-Dilutive Financing
ECL has helped 300+ SaaS and AI startups access the non-dilutive capital they need to make strategic decisions that support sustainable, long-term growth. Apply today to see if you qualify for up to $3M in non-dilutive financing.
Series A FAQ
Series A funding is the first major round of venture capital used by SaaS and AI startups to scale product, team, and go-to-market after achieving early traction.
Series A rounds typically raise $5M–$20M, depending on the startup’s traction, market, and capital needs.
Founders usually don’t make personal money during Series A, as proceeds go to fund company growth, not individual payouts.
If more capital is needed post-Series A, startups can use non-dilutive financing to extend runway, raise a bridge round, Series A extension, or move toward Series B if metrics support it.
Series A investors typically include venture capital firms, sometimes joined by strategic investors or super angels with domain expertise.
Series A founders make money later through equity value appreciation realized at acquisition, secondary sale, or IPO.
Series A investors make money by receiving equity that appreciates in value and pays out during a successful exit, such as an acquisition or IPO.
Only about 50% of Series A startups raise a successful Series B, and fewer make it to exit or IPO.
Series B funding is the second formal venture capital funding round, raised to scale revenue, expand teams, and optimize operations, typically after proven product-market fit and repeatable growth.
Series C is the third formal funding round. Funding from a Series C round supports aggressive scaling, new market entry, or acquisitions, often from growth-stage or late-stage investors.
A Series D funding round is for startups that need additional capital before an exit, are facing delays, or are exploring new pivots or strategic expansions.
Most venture-backed startups go through 3–5 rounds (Series A to D/E) before pursuing an IPO.
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