#73 — Best practices: When should you raise your Series A funding?

Note: If you haven't already, consider reading our general playbook on raising capital first and then come back to this article.§

Why it matters: Timing your Series A can make or break your startup's trajectory — and getting it wrong costs you months of runway and momentum.§

The signals you're ready

Strong traction is non-negotiable. You need 12%-20% month-over-month growth minimum — the hockey stick curve that makes VCs pay attention. If you're sitting at 5%-10% MoM and hoping for a breakthrough, wait. Start connecting with investors when your MoM growth trend is thriving and you can offer sound reasons why this is likely to continue or even increase.§

Revenue growth beats vanity metrics. Customer metrics like traffic, retention, and engagement are essential measures of company health, but you need revenue growth to get VCs to invest. When revenue growth is there, customer metrics will further validate what's working and why. Investors want to feel confident that you're going to make their money grow.§

Product-market fit isn't just a buzzword. You need concrete proof you're filling a real market gap, not just potential. There's no set formula for measuring product-market fit, but it's loosely defined as proof that what your company is doing is successfully filling an existing gap in the market. During seed rounds, you prove market opportunity exists — but for Series A, you need to demonstrate you're actually hitting the mark.§

The relationship game

Build your investor network early. Build and maintain relationships with investors as far in advance as possible before you plan to pitch them. It's significantly harder to successfully commit an investor with a cold pitch. Talk to a lot of venture capitalists, knowing that you won't pitch to all of them.§

Leverage your network for intelligence. If you're not sure what level of growth will make investors take notice, ask other founders in your industry or investors in your network. This is another reason to build active relationships with investors before you ever pitch them — they're usually happy to give insights on what they do and the thinking behind how they do it.§

Know your growth strategy inside out. When you pitched for seed funding, you might have communicated that you would explore a variety of channels for business growth. During the Series A round, investors aren't looking to finance further experimentation. Instead, they want to hear your plan for driving substantial business growth. Once you are clear and specific about what you can do to accomplish that, then you're ready to have the conversation that Series A investors want to have.§

The stakes and positioning

Understand the equity implications. During the Series A round, companies typically trade a 10%-30% stake in the company in exchange for preferred stock, so the risk is higher for this particular round of funding. Which investors join, which investors notably don't join, and the amount raised all speak to where the company stands and where investors see it going.§

Recognize the public statement. New fundraising rounds make a statement to competitors, current investors, customers, and the general public about a startup's value and its prospects for the future. This is especially true during the Series A round, which is the first significant round of outside funding for most startups.§

Growth metrics that matter

Target the right growth range. VCs want to support high-growth companies, so make sure your growth metrics are in the right range to appeal to them. Maybe you're tracking 50% MoM growth, but your revenue is lower than what investors are looking for. The sweet spot for strong traction is that 12%-20% month-over-month growth or higher.§

Demonstrate sustainability. It's not just about hitting growth numbers once — you need to show consistent, sustainable growth patterns that indicate your business model is working and scalable.§

The bottom line

Series A timing isn't about hitting arbitrary milestones — it's about demonstrating sustained momentum that investors believe will accelerate with their capital. The transition from seed to Series A represents moving from proving potential to proving execution.§

Between the lines: The best time to raise is when you don't desperately need to. Strong metrics give you negotiating power and investor confidence. Make sure you're highly confident about the story you're telling to prove product-market fit before pitching for your Series A funding.§