How to Raise a Series A: The Modern Bar and the Process

How to Raise a Series A: The Modern Bar and the Process

Overview

The Series A is where fundraising gets formal. A lead investor takes a board seat, sets terms, and underwrites a real business — not a bet on a founder.

This guide covers the current bar, the metrics investors underwrite, and how to run a Series A process end to end.

How much to raise

• Typical range: $8M–$20M for software; more for capital-intensive categories
• Typical post-money valuation: $40M–$100M
• Typical dilution: 15–25%
• Instrument: priced preferred equity, negotiated on a term sheet

The Series A bar

Most software Series A rounds require $1M–$3M in ARR growing 3x+ year over year, with clear evidence of a repeatable acquisition motion. The bar has risen: 'strong growth off a small base' is no longer enough on its own.

• ARR: $1M–$3M for most software categories.
• Growth: 3x+ year over year, or 15%+ month over month for younger companies.
• Net revenue retention: 110%+ ideal, 100%+ table stakes.
• Sales efficiency: CAC payback under 18 months, gross margin above 70%.

The metrics investors underwrite

• Cohort retention curves — are customers still around at month 12?
• CAC by channel and CAC payback period.
• Gross margin and contribution margin unit economics.
• Pipeline coverage: forward-looking bookings vs. plan.
• Sales rep productivity if you have a team.

Board and control terms to negotiate

• Board composition — typical 3-person or 5-person board; watch for common vs. preferred balance.
• Protective provisions — what actions require investor consent.
• Option pool — expanded pre-money almost always; negotiate size.
• Liquidation preference — hold the line at 1x non-participating.
• Pro-rata — expected for the lead.

Running a Series A process

• Prep phase (4–6 weeks): metrics, deck, data room, warm intros lined up.
• First meetings (2–3 weeks): 15–25 partner meetings in a compressed window.
• Diligence (2–4 weeks): customer references, cohort deep-dives, tech reviews.
• Term sheet (1–2 weeks): negotiate one, sometimes run competing offers.
• Close (30–45 days): legal, definitive docs, wire.

Frequently asked questions

What ARR do I need to raise a Series A?

For most software categories, $1M–$3M in ARR growing 3x+ year over year is the current bar. Deep-tech, hardware, and enterprise infrastructure often raise Series A rounds on milestone-based traction rather than revenue.

How long does a Series A take?

A well-prepared process runs 8–14 weeks from first partner meeting to signed term sheet, plus 30–45 days to close. Slow or contested rounds can take 6+ months.

How much dilution should I expect at Series A?

15–25% for the round, plus a 5–10% expansion of the option pool pre-money. Total dilution to founders and existing shareholders is often 20–35%.

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