Navigating the Journey from Seed to Series A Investment
For many tech founders, securing Series A investment is a critical milestone—a validation of their business model and a catalyst for scale. But in today's tough funding environment, demonstrating sustainable growth is more crucial than ever.
On a recent episode of The Sales Scoop, Alastair Cole and Kiran Gill explored what it takes for startups to successfully transition from seed funding to Series A. Here’s a breakdown of the key insights from that conversation.
Understanding the Current Funding Landscape
2024 has been one of the toughest years for investment in recent memory. UK tech funding dropped by 25% from the previous year, and globally, funding fell by up to 30%. Founders need to be sharper than ever in proving that their business is worth the investment.
Despite these challenges, some companies are still closing their Series A rounds. A closer look at recent investments, such as Storm Harvester’s $8.4 million raise, reveals a common theme: investors are looking for businesses with a clear market position, strong demand, and a well-structured sales function.
Early-Stage Funding Explained
Before reaching Series A, startups typically move through these funding stages:
Pre-Seed: The product is in development, but full market fit isn’t confirmed yet. Revenue may be minimal or non-existent.
Seed: The business has a defined target market, clear competitive positioning, and a strategy for growth.
Series A: The company is scaling rapidly, with a proven product-market fit and growing revenue.
To progress through these stages, founders must demonstrate not just growth, but sustainable and predictable growth.
Five Key Metrics for Series A Investment
Investors use specific metrics to assess whether a company is Series A-ready. These five stand out:
1. Annual Recurring Revenue (ARR)
Demonstrates sustainable income and revenue predictability.
Investors look for steady, double-digit year-over-year growth.
Businesses with inconsistent or small ARR will struggle to attract investment.
2. Activation Rate
Measures the percentage of customers who fully engage with the product.
A low activation rate suggests poor onboarding or a weak value proposition.
Investors want to see that customer interest translates into usage and retention.
3. Customer Acquisition Cost (CAC)
Indicates how much it costs to acquire a customer.
A high CAC relative to revenue is a red flag—investors want efficient customer acquisition.
The sales and marketing strategy must be well-optimized and scalable.
4. Customer Lifetime Value (LTV)
The total revenue a company can expect from a single customer.
High LTV signals strong customer retention and potential for upselling.
Businesses with high churn rates will struggle to maintain a compelling LTV.
5. Churn Rate
The percentage of customers who stop using the service.
Investors typically look for a churn rate under 8%.
High churn can indicate weak product-market fit or an ineffective sales process.
Telling a Compelling Growth Story
Having strong metrics is one thing; presenting them effectively is another. Investors need to see:
A clear narrative connecting past growth with future projections.
Precise, validated data that supports revenue claims.
A compelling case for how investment will accelerate success.
It’s also essential to acknowledge challenges. Investors don’t expect perfection—they expect resilience and a clear plan for overcoming weaknesses.
Building a Scalable Sales Function
A key factor in proving Series A readiness is a mature sales function. At The Uplift Partnership, our 360° Sales Diagnostic helps startups professionalize their sales process, ensuring they’re well-prepared for investor scrutiny.
This structured evaluation provides:
A comprehensive sales performance score across seven core areas.
Bespoke recommendations to strengthen sales strategy.
A revenue roadmap aligned with growth objectives.
Final Thoughts
Securing Series A investment isn’t just about proving you have a great product—it’s about demonstrating a scalable, repeatable growth engine. Founders must be prepared with the right metrics, a compelling growth story, and a professionalized sales function to attract investor confidence.
For those looking to sharpen their approach, our latest white paper, The Empowered Founder Seller, provides 60 actionable steps to enhance sales performance. Download it today at The Uplift Partnership.
Stay tuned for our next Sales Scoop episode, where we’ll explore AI literacy and its impact on business growth.
For expert guidance on sales strategy, Series A readiness, or tailored sales diagnostics, get in touch with The Uplift Partnership today.
