In the past decade, we have witnessed a significant shift in the seed and Series A financing landscape, posing greater challenges for founders. To maximize their chances of success, we are sharing our comprehensive Series A checklist. Although its primary focus is on securing a strong Series A round, it is also relevant for any early-stage fundraising endeavors.

It is important to acknowledge that, as a general rule, startups typically need to demonstrate product-market fit and achieve a certain level of scale before they can successfully raise Series A funding. However, in addition to these prerequisites, there are 13 additional proof points that investors often seek when evaluating startups for fundraising opportunities. These proof points serve as indicators of a startup's potential for growth, sustainability, and long-term success. By meeting these criteria, startups can enhance their chances of securing the necessary funding to fuel their growth trajectory. Let's explore these 13 proof points in more detail:

1. Show Traction

One of the most important things Series A investors look for is traction. How you determine whether a company has traction varies widely by context, but relatively small differences can lead to order-of-magnitude differences over even a 12-month time scale.

Investors seek a hockey stick curve, indicating rapid growth and an approaching inflection point, rather than a linear trajectory. They want their investment to act as rocket fuel for startups. Founders should focus on operationalizing a growth engine that achieves a monthly growth rate of 10% or more, resulting in a 3-10X growth trajectory.

The difference between a 10% growth rate and a 20% growth rate is the difference between ~3X growth and ~9X growth over the span of a year. That’s substantial.

This growth can be measured by various key performance indicators, with revenue being the optimal choice. Startups demonstrating sustainable growth at such a trajectory face little difficulty in raising funds. However, the starting point for growth is crucial, as higher starting revenues yield more impressive results. Moreover, maintaining consistent month-to-month growth for at least six months is essential to establish a trend that investors can extrapolate from. By meeting these criteria, startups can effectively check the traction box in the minds of investors and secure funding.

2. Demonstrate Product-Market Fit

Achieving product-market fit is a delicate balance of art and science. The scientific aspect involves analyzing cohort data, retention curves, organic adoption rates, and other quantitative metrics to demonstrate that the market is embracing your product. It is crucial to diligently collect and analyze this data not only to prove product-market fit but also to showcase your organization's data-driven approach.

However, the art of evaluating product-market fit lies in the intangible factors surrounding your company. It's the buzz in the press, the glowing customer feedback, the testimonials, and the passionate user base that contribute to the sense of having found product-market fit. These qualitative indicators create a feeling of being pulled forward, as if someone has grabbed your head and propelled it forward, validating the quantitative data. Sometimes, an anecdote capturing this feeling can have a more powerful impact rhetorically than mere data alone.

As James Currier, my colleague, often emphasizes, the qualitative evidence of that irresistible pull forward serves as a reinforcement for your data-backed proof of achieving product-market fit. Balancing both the art and science of product-market fit amplifies your ability to showcase your success to investors and stakeholders.

3. Prove Scalability & Unit Economics

During the Series A stage and beyond, investors seek a clear and feasible path to growth and scalability. Achieving scale is subjective and varies for each company, so it is beneficial to gather insights from peers and engage in discussions with investors to establish benchmarks.

To demonstrate growth potential, startups need to showcase a credible plan. In the seed stage, experimenting with multiple channels is common, but at this stage, it is crucial to focus on one or two channels with a well-defined strategy for achieving scale. This strategy can involve leveraging product enhancements, marketing initiatives, or sales efforts. Effectively communicating the growth levers and demonstrating the ability to scale them profitably is paramount.

Investors particularly value proof of latent demand, which indicates an untapped market waiting to be unlocked with additional funding. Framing the funding request in terms of unlocking this latent demand increases the investor's confidence and facilitates their decision-making process. By addressing these key factors, startups can present themselves as a promising investment opportunity.

4. Have a Big Vision (but OK to Start Small)

Achieving a successful Series A funding round requires demonstrating a clear trajectory towards significant revenue milestones, such as $100 million and potentially even $1 billion. However, it is advisable for portfolio companies to focus on finding the "white-hot center," a well-defined and well-executed niche that serves as a solid foundation for growth. From this strong position, the company can then expand into adjacent market segments.

While starting small and mastering a specific market segment is important, it is equally crucial to paint a bold and inspiring vision for the future. Investors want to see that you have a grander vision beyond the initial niche and that you possess the ambition and potential to make a significant impact in the industry. By striking a balance between a well-defined niche and an inspiring long-term vision, startups can position themselves as attractive investment opportunities in the eyes of investors.

5. Crafting a Clear and Captivating Story

What is the purpose behind your venture? Why is this the perfect moment for your solution? What barriers have recently been overcome to make this opportunity possible? How does your offering address a pressing, unmet need in the world today?

At our core, we believe that timing is crucial for startups. A compelling narrative begins by identifying a viable and untapped opportunity that has yet to be explored. It highlights a significant problem that remains unaddressed, while envisioning a solution that can alleviate it. The narrative paints a vivid picture of a world where that problem no longer exists.

The key to constructing a clear and compelling narrative lies in framing the problem at hand, outlining the steps to solve it, and highlighting the recent shifts and transformations that have made the present moment the opportune time for your solution. By effectively conveying these elements, you can captivate your audience and demonstrate why your startup is both necessary and poised for success.

6. Developing a Robust Team

A significant indicator to investors that your startup is ready for the next phase is the ability to build a strong team and fill gaps in key areas where your founding team may lack expertise. This can be accomplished by hiring employees or engaging advisors.

Demonstrating the capability to attract and onboard talented individuals from renowned educational institutions, leading companies, or simply exceptional individuals who can contribute to the company's early development is crucial. Investors who are well-versed in successful ventures understand that diverse talent is essential for long-term success. The longer you delay building a talented team, the more challenging it becomes. Therefore, by the time you seek Series A funding, it is vital to showcase your ability to hire individuals who bring diverse perspectives, qualities, and experiences beyond those of the founding team. While investors don't expect a team resembling the United Nations, deliberate efforts to expand beyond the seed stage demonstrate a commitment to laying a solid foundation.

When you can attract talent from prestigious sources, it serves as a strong signal to investors that your company possesses a magnetic appeal and can convince highly desirable individuals to join your ranks. The willingness of elite talent to invest themselves in your venture provides a reliable heuristic for investors. Remember to highlight and showcase the backgrounds and accomplishments of your hires to further reinforce investor confidence in your team.

7. Establish a Strategy for Long-Term Success

Prominent investors seek to support startups that can clearly demonstrate their position as the leading force in a winner-takes-most market. This is because such market dominance holds the potential for generating substantial returns. Defensibility, particularly through the utilization of network effects, stands as the most significant factor in creating long-term value, and astute investors recognize its importance.

Therefore, if you wish to capture investor interest, it is imperative that you can present a robust strategy for defensibility. You must showcase your ability to establish a competitive advantage that shields your business from threats and imitators. Additionally, it is crucial to demonstrate either your current status as the category leader or your clear path towards achieving that position. Investors want to see that you have the potential to dominate the market and sustain your advantage over time.

By outlining a compelling defensibility strategy, you can instill confidence in investors and position your startup as an attractive investment opportunity. It is essential to emphasize how your unique approach, technology, or network effects set you apart from competitors and pave the way for long-term success and profitability.

8. Harnessing the Power of Scarcity

When determining the amount to request during a fundraising round, it is often wise to err on the side of conservatism. Rather than aiming too high, setting slightly lower expectations can create an environment of competition among investors, driving the funding amount upwards. The prospect of missing out, known as FOMO (fear of missing out), greatly appeals to venture capitalists, and top-tier VCs are always willing to invest more capital.

During the fundraising process, it is essential to be transparent about your timeline. By clearly communicating your fundraising deadlines and decision-making schedule, you can instill a sense of urgency and scarcity among potential investors. While it is best to avoid explicitly mentioning the names of other VCs, you can signal that a decision will be made within a specific timeframe, allowing all interested investors the opportunity to participate and align their due diligence processes accordingly.

Creating a sense of urgency and scarcity not only motivates investors to act swiftly but also positions your startup as a valuable and sought-after opportunity. This strategy can generate heightened interest, drive up funding amounts, and attract top-tier investors who are eager to seize the opportunity before it slips away. Remember, effective communication and strategic transparency are key in creating an environment that maximizes investment potential.

9. Establish VC Connections in Advance

To maximize your chances of securing the desired venture capital (VC) funding, it is crucial to initiate relationships with potential investors well in advance. Relying on a last-minute approach before seeking funding is not ideal. Ideally, founders should start building VC relationships at least six months before the fundraising process begins. This timeframe allows for ample opportunity to find the right partner for the entrepreneurial journey while also giving investors sufficient time to familiarize themselves with the company.

As a general benchmark, founders can expect to receive one term sheet for every 20 or more introductions made. Therefore, it is essential to focus on building meaningful relationships and identifying why a specific VC would be the right fit for your startup. Clearly express your alignment with their investment thesis and highlight how their expertise and network can benefit your company. Additionally, prompt and timely follow-up is crucial in maintaining the momentum of these relationships. Be prepared to provide detailed responses to any inquiries or concerns they may have, regardless of the time of day.

To provide an additional buffer, it is advisable to aim for a Series A funding round when your company still has at least six months' worth of cash on the balance sheet. This approach ensures that you have sufficient runway to execute your plans and navigate any unforeseen challenges that may arise during the scaling process. By proactively nurturing VC relationships, demonstrating alignment, and maintaining solid financial planning, you can significantly increase your chances of securing the desired funding and finding the right partners to support your startup's growth.

10. Project Momentum

Creating a sense of momentum is a powerful way to captivate investors and generate excitement around your business. By showcasing continuous progress in various aspects of your company, such as business metrics, hiring, PR, and marketing, you can demonstrate that your business is on an upward trajectory.

Managing and surpassing expectations is crucial in maintaining this momentum. Instead of setting lofty goals that may be difficult to achieve, it is more effective to set conservative expectations and consistently exceed them. For example, if you project 15% growth in a meeting but deliver 20%, it creates a stronger impact than setting an expectation of 20% growth and meeting it.

One common mistake made by founders is overselling during initial meetings, making grand promises that may not materialize. To build trust and credibility, it is important to provide realistic projections and deliver on them consistently.

Investors are particularly thrilled to see a business that continues to improve and surpass expectations at every interaction. This signals a company that is constantly gaining momentum and holds the potential for even greater success in the future.

To cultivate this sense of acceleration, identify the "minimum viable excitement" in your future vision and set expectations based on that. Then, consistently outperform those expectations to create a perception of ongoing progress and growth. By surpassing expectations and projecting a strong sense of momentum, you can generate enthusiasm not only among investors but also among your employees, fostering a positive and motivated work environment.

11. The 'Ladder of Proof'

As we have previously discussed, venture capitalists rely on a mental framework known as the 'ladder of proof' to evaluate startups based on various indicators.

In the world of fundraising, it is essential to demonstrate progress and continually climb higher on this ladder of proof. Each step represents a significant milestone that shows investors that your startup is moving in the right direction and making tangible progress.

For example, if you were able to transition from having a customer waitlist to acquiring active users, this is a strong signal of growth and validation. It demonstrates that your product or service is gaining traction and resonating with your target audience.

By consistently ascending to higher rungs of proof, you build confidence and trust with investors. It shows that your startup is not only meeting expectations but exceeding them, which enhances its investment appeal.

To continue climbing the ladder of proof, focus on achieving key milestones such as increasing user engagement, securing strategic partnerships, generating revenue, or expanding into new markets. Each milestone reached reinforces the narrative of progress and propels your startup forward.

Remember, the ability to consistently surpass previous levels of proof showcases your startup's potential and increases the likelihood of securing further funding and support from investors.

12. Elevating Your Presentation to World-Class Standards

While the design and data presentation in your pitch deck may not always be the decisive factors during the seed stage, they become crucial when pitching for your series A funding. At this stage, having a pitch deck with world-class design and compelling data can make a significant difference in capturing investors' attention and securing their support.

When creating your pitch deck, strive for simplicity and visual appeal. A clean and professional design will enhance the overall impression of your presentation. Additionally, ensure that you provide ample data to support your claims and demonstrate your in-depth knowledge, thorough analysis, and valuable insights.

Consider including a comprehensive appendix or integrating relevant data directly within the deck itself. This approach allows investors to explore the details further, showcasing your commitment to transparency and providing them with a deeper understanding of your business.

By presenting a pitch deck that exudes excellence in design and data, you establish yourself as a credible and knowledgeable entrepreneur. It leaves a lasting impression on investors, increasing their confidence in your startup's potential for success.

13. Establishing Social Validation

Social proof holds significant weight in the eyes of investors, making it crucial to cultivate a strong network of top advisors, influencers, and angels who can vouch for your startup. By aligning yourself with respected individuals in your industry, you not only gain credibility but also attract the attention of potential investors.

To maximize social proof, seek out introductions to investors from multiple sources who have a genuine understanding of your company. These introductions from trusted individuals enhance your reputation and increase the likelihood of capturing investors' interest.

Furthermore, highlighting endorsements from esteemed customers, strategic business partners, and press coverage helps solidify your startup's reputation. Positive reviews and testimonials from reputable sources serve as external validations of your product or service, building trust and confidence in your offering.

When showcasing social proof, consider incorporating these endorsements into your pitch deck, website, or marketing materials. By prominently featuring these accolades, you demonstrate your startup's market traction and the recognition it has garnered within your industry.

Remember, social proof acts as a powerful signal to investors, signaling that your startup is not only backed by influential individuals but also endorsed by satisfied customers and recognized by reputable sources. This accumulation of social validation can greatly enhance your prospects for funding and overall success.

Transitioning from a seed to series A company presents its challenges, but our curated resources aim to support startup growth by addressing key areas such as the significance of a world-class pitch deck, and building social proof through influential connections and endorsements to facilitate the transition from seed to series A.