The Series A $1M ARR is a myth What investors want is a model that's starting to work - consistent price points, similar ICPs, and a GTM motion that's repeatable I've had companies well above AND well below the $1M mark raise Series As - chase a strong GTM engine, not a number
Curious to learn more about the reasoning behind similar ICP's?
"chase a strong GTM engine, not a number" 👏 Well said, Robby!
The $1M ARR is a proxy number to: 1. Confirm a large market exists for a standard product/service 2. A primary customer persona is proven 3. Pricing & discounting model is validated 4. True unit cost of delivery is validated If the $1Mn doesnt prove these factors, the number is of no relevance. Similarly, if at least 3 of these 4 are proven, bets can be taken even without the $1Mn tag. Many a times, in pursuit of simplifying things, the underlying science/rationale is forgotten.
Well summarized — the number is a consequence of the GTM engine wrapped around a brilliant product that users won't/can't live without. I think many investors throw this number out as a reason to pass. What they are actually saying is that the product-building and product-distribution engines are not well-architected (or not in sync) "yet" to put in $10-20M more.
Agree. But, investing at sub 500k ARR is also not enough data to define it as consistency.
Yes but that $1m ARR could be the difference between a $10m v $15m Series A
Spot on! Before the 2022-2023 funding winter, $1M ARR would get you good term sheets and sure shot next round but it is no longer the case.
👏🏾👏🏾 product revenue is not the same as services revenue. That should be on the agenda for every board that’s interested in SaaS and scale.
Founder-led company building
1wARR, NRR, Future Pipeline, Story to grow to $10M+, REAL product adoption (with proof points), true differentiation in the market.