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What are the key target metrics for SaaS companies to raise a Series A?

It seems like people throw around the 15-20% MRR growth as the number, but there is little evidence to suggest that this is the actual target. What metrics can I aim towards if I'm looking to raise a Series A?

6 Replies

Andrew Hoag
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Andrew Hoag Advisor
Builder of products, teams and companies
David, I'm researching this as well for a company I advise, and would love reference metrics from other SaaS founders who recently raised an A round. There's a few good posts on this:http://christophjanz.blogspot.de/2015/05/a-closer-look-at-6-things-to-pre-empt.html and of course all the stuff from Tomasz Tunguz.

My conclusion is that getting to 6-figure MRR is important for valuation, but also possibly even more important is a growth rate that is consistent or accelerating. One of the companies I advise is in the 15% growth rate, so that seems in line with your metric. But I would suspect a positive second derivative (rate-of-change) of growth rate is even better, if you have it.

Would love to hear more!
Karl Schulmeisters
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Karl Schulmeisters Entrepreneur
CTO ClearRoadmap
Perri Blake Gorman
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Founder of Archively & UnrollMe
So from conversations I have been having the numbers I have been hearing are $30k MRR for Institutional Seed Rounds and $100k MRR for Series A with at least 10% growth.
Karl Schulmeisters
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0
Karl Schulmeisters Entrepreneur
CTO ClearRoadmap

It all depends on what your initial seed amounts are and how soon you start making revenue from the injection of capital.

each round wants to exit in 3 years ideally. So they want to see that you will give them 10x return in 36 mos.

now theoretically that works out to be doubling every 11 mos or just under 9% growth per month. But as SaaSTR suggests. in a SaaS company in todays market that needs to be 125% /yr or 10.1%/month http://www.saastr.com/is-5x-now-the-new-2x-in-saas/

secondly in the seed round for SaaS you will take most of 24 mos to get to traction http://www.saastr.com/if-youre-going-to-do-a-saas-start-up-you-have-to-give-it-24-months/


(remember these are the investor expectation) so you really are talking about needing to be growing at roughly 300%-400% in your last year to make up for the slower start ie you will double in your first 24 mos so you will need to more than quadruple in your last 12. and that's 20% monthly.


And when you get to Series A. they don't want to see that growth falling off.



David Cavander
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David Cavander Advisor
Principal Scientist, Digital Marketing at Adobe
key facts on customer lifetime value -- acquisition, retention, upsell ! dcc
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