How to go from Seed to Series A

By: Pourya Moradi

At Think+, our primary goal is to help our portfolio companies go from Seed to Series A as smoothly and quickly as possible. Every round comes with its own specific set of challenges, but what makes series A particularly challenging is that traction alone is not enough and you need to show predictability, scalability, and repeatability.

We meet countless entrepreneurs who found enough early adopters to get to a million-dollar revenue, which leads them to believe the product is enough and they start chasing more revenue by going after low hanging fruits rather than building a process and an infrastructure to capture broader market opportunity.

Below are just a few points to consider before raising series A.

  1. Develop a winning go to market (GTM)

In my last piece, I wrote about how to achieve product-market fit (PMF), but that is not the only thing you need to build a $100M+ business. You should think about your GTM, and define your channel, and sales strategy.

Take for example Stripe — which is now at a $20B+ private valuation! Back in 2010 they identified that the existing platforms for payment processing absolutely sucked! The process was manual, approval required phone calls, and the code/UI/UX left a bad impression with the users of eCommerce sites. As they went through steps 1–3 (identify, unpack, and analyze a pain point) and followed that up with step 4 (market timing), they realized the best place to go was to go to developers of mobile apps that wanted to do in-app payment processing.

This fundamentally changed the game plan! They didn’t have to hire an enterprise-class sales force and go haggle with and hundreds of other enterprise-class websites and waste tens of millions of dollars on a direct sales force. They focused on developer conferences and hackathons and a freemium model that grew through a community.

To do this well, you should:

A) Define your market:

· Which markets have the biggest and most urgent pain?

· Where are there gaps in the market?

· Which markets are most aligned with your product’s core value?

· Which markets can you most easily reach?

B) Define your channel (How you link your offering to your customers):

· How, where and why do your prospects choose to buy?

· What are the most effective ways of connecting with your prospects and generating qualified sales opportunities?

· What is the right distribution model/channel based on your core value proposition?

· How does your offering fit with your target markets and channels?

C) Choose a sales strategy

No one method will work for every product or market, so it’s important to consider the price, complexity, scalability of your offerings. There are generally four go-to-market sales strategies, each one catering to a different product and business model.

I — The Self-Service Model: Customer makes a purchase on their own.

II — The Inside Sales Business Model: Prospect is nurtured by a sales rep to convert into a deal.

III — The Field Sales Business Model: You have a full sales organization that closes large enterprise deals.

IV — The Channel Model: Outside agency or partner sells your product for you.

2. Focus on quality of revenue:

If you’ve built a product with a core value proposition that resonates with your customers, you might get some early revenue, but what’s important to Series A investors is the quality of revenue (i.e. scalability). To make sure this is done well you should:

a. Implement data and analytics early on so you can measure where your revenue is coming from, how many times are users performing the core action on the expected cycle. Set up tools required to understand your customers’ behavior and your unit economics as it will allow you to see how you progress and what’s working or not.

b. Focus on engagement and retention as opposed to “pure acquisition”. People think if you increase acquisition, it’s enough, but engagement, activation, and retention are more important than just pure acquisition. You should build a core value and get people to experience it as frequent and as soon as you can.

c. Invest in infrastructure early on before you start to think about scaling. We often get founders that have noticeable revenue but they have focused on attaining low hanging fruits and that gets us worried whether the model is scalable.

3. Focus on sustainability:

Because of an abundance of capital, especially in the seed stage, many companies focus on “growth at all cost”. They use “hacks” to gain momentum without focusing on the process. You should focus on building a capacity that gets you to $100M+ revenue instead of rinsing and repeating what has worked for someone else to get to a few hundred thousand in revenue. Many might be in a market niche for a service or product that grows without much effort, so it deludes founders to just ride the wave without having a clear plan to manage growth.

That’s why a process and having a playbook is so crucial. It might feel like unnecessary overhead and a counterintuitive of two key competitive features of startups: adaptability and speed, but what makes a successful business is the combination of a unique set of variable that work together that translate into growth. A process will enable you to uncover those unique set of variables and will help you find out what’s working and what’s not working.

To prepare yourself for sustainable growth, you should:

· Find the “right” channels that allow you to scale customer acquisition

· Set the right goals/ metrics — this shouldn’t be too short term and not tool long term and that really depends on your sell cycles

· Prioritize — You can easily get distracted by going after every opportunity you find, you should stay focus on a specific customer segment

· Test and analyze — Understand what’s working and not and adjust accordingly

· Identify a repeatable sales process/playbook

There is no specific/straight path to scale and it is deeply personal to each company’s product, market, and customer behaviors. How you come up with the process is not as important as your mindset and consistency. What I’ve found is that great founders have the ability to evolve as their companies grow and have the right mindset at every stage.

You should also be aware of the following risks before entering the growth stage:

· Underestimating how long it takes to raise Series A and overestimating revenue forecast

· Insufficient cash to handle the costs associated with growth

· Hiring mistakes (you shouldn’t compensate quality for urgency)

As always, I appreciate any feedback and suggestion. My email is

Thanks to Safa and Nazila for being my beta readers and helping with this.