Anatomy of a Series A Raise

Learn how used our survey data to examine the metrics surrounding the Series A round.

Content

Introduction
Series A by the Numbers
Successful Decks Focus on the Future
Investors Will Scrutinize What Matters Most
The Anatomy of a Series A Raise
When To Reach Out To Investors
How Do You Choose A Lead Investor?
6 Key Takeaways For The Series A Raise
The Reality of Series A

Introduction

Succeeding in Series A calls for a more qualitative approach. The rounds are much bigger and the meeting acceptance rate is much higher. Story-centric decks stand out to investors, most of the infrastructure/logistics vetting has already taken place in earlier rounds. Investors want to see scalability and positioning for the future. Successful Series A decks differ from Seed decks, focusing less on the Problem, Solution, Product, and Competition sections.

Series A by the numbers

A milestone-round for any company, the amount raised during the Series A is dramatically larger than earlier fundraises. Expect to reach out to a smaller, but more committed pool of investors.

Average amount raised by round

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Successful Decks Focus on the Future

Where successful pitches in the Seed and earlier rounds require detailed Problem, Solution, Product, and Competition sections, Series A decks need to tell their company’s unique story to instill long-term confidence with investors.

The Traction section, for example, needs to be more robust and inclusive. Instead of including one type of traction as was common in earlier decks, successful Series A decks need to include every type of traction. 

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Not only do they include customer numbers, revenue, and future pipeline information, there’s also a distinct focus on repeatable traction with slides dedicated to customer retention, reviews, percentage of repeat customers and slides highlighting the details of the customer experience the company is providing.

In the Series A round, investors need to see a clear track record of fiscal responsibility. In the earliest stages, startups will use investments to build talent, secure technology, and to buy basic business services. 

As things progress and the company’s operations become more complex, overhead costs like human resources and office space will demand more capital. Investors at this level want to see a certain level of capital discipline before they sign a check.

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Investors Will Scrutinize What Matters Most

Investors tend to spend the most amount of time on 3 key sections within Series A pitch decks. The goal is to show investors that the business’s success is repeatable and scalable in the long-term.

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The Anatomy of a Series A Raise

As Series A companies are more mature than in previous rounds, Series A decks are longer at 25 slides. But VC reading time has actually decreased for this round, clocking in at 3:11. 

Series A investors are more specialized and therefore much more efficient at reading decks. Another trend that holds true in the Series A round is more time spent on unsuccessful decks, which comes in at just over six minutes.

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Since the equity you give up for a Series A round is fairly standard, it’s probably not a place you want to spend too much time negotiating. Series A investors will be with your for life (or at least the life of your company). 

You should also remember to build in time between signing your term sheet and receiving your check, which takes an additional 5.5 weeks. The last thing you want is to be nearly out of money when negotiating your Series A round.

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When To Reach Out To Investors

Best practice says to start thinking about your Series A round during or before your Seed raise. Use Series A investors to get feedback on your Seed deck. Not only will you build relationships for the future, you will strengthen your Seed deck and improve your chances of investment. 

Something you should also be aware of during your Seed round is asking investors what their criteria is to use their pro rata. Nearly every founder in our research (88%) said their previous investors participated in their Series A round. 

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How Do You Choose A Lead Investor?

Founders choosing whom they allow to invest in their Series A round is just as important as which company an investor chooses to invest in. This relationship needs to be strong for both participants and the reason you choose your investor is a decision to not take lightly. Based on our research, the top reason founders chose their Series A investor was the investor’s industry specific experience. 

While this can be an advantage for some teams, other founders chose their investors based on term sheets, whether it was the best offer, the first offer, or the only offer. Founders with options for a lead investor should think about the value an investor can add. This will be different for each founder depending on a variety of factors.

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6 Key Takeaways For The Series A Raise

Raising any round is difficult, but Series A takes a long time. From when you start to when you actually see money in your bank it could be well over six months. With that kind of road ahead of you, we’ve compiled six key things you should remember as you embark on your Series A raise. 

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The Reality of Series A: Where the Rubber Meets the Road

A very small percentage of companies will make it as far as the Series A round. Once secured, Series A funding shows that investors have identified your business as a lasting venture with long-term viability and profitability potential. In order for a company to be successful, it’s important to stay tuned in to investor trends and modify and update your fundraising approach accordingly. The expectations of Series A investors are fundamentally different from those in earlier rounds, with emphasis on scalability and future positioning.

Methodology
This research was done using a pool of 435 startup founders who opted in to participate. DocSend also surveyed these companies to gather additional data and insights. All of the data analyzed comes from companies that opted into the analysis. The data was collected and analyzed throughout 2019.

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