Scaling Series A to C – TechCrunch
T2D3 (triple, triple, double, double, double) has become a well-known goal in the startup scene to achieve unicorn status. Formulating the goal may be easy, but achieving such revenue growth is notoriously difficult.
A to study of Dealroom shows that about 16% of companies that raise a seed round succeed in raising a Series B investment, and only about 7% of those that raise seed funding raise a Series C investment.
This statistic is partly explained by the lack of a good organizational framework to move companies from seed to series C. There is a lot of interesting content on the start-up phase (getting to product fit). -market) and success stories (raising hundreds of millions of dollars and exits of several billion dollars), but there is little data on how founders can take a company from $ 1 million to $ 25 millions of dollars in annual revenue (broadly defined as stages in Series A, B, and C).
Based on 47 interviews with industry experts including Sean Ellis, Mark Roberge, Bill Macaitis, Micha Breakstone and Brian Requarth, desk research and our own experience as founders and investors in Series A companies through C, we drew three major ideas on how to grow a business from an organizational point of view. Here is our framework:
Scaling up is a continuum with stages of maturity
A fast-growing business with $ 5 million in revenue has different scale needs compared to a fast-growing startup with $ 15 million in revenue. The concept of “maturity stages” for moving a business forward can be useful in meeting different needs.
The most common “maturity stages” in scaling a business are:
- Ad hoc.
- Basic process.
- Reproducible process.
- Predictable process.
- At scale.
Typically, for a business in the early stages, everything is developed in a more or less ad hoc manner. At the A-series stage, it’s more about developing reproducible processes. Series B and C deal with predictability of results. Beyond the C series, it’s about doing everything on a large scale.
Of course, this is a company-wide vision. As we explain below, it may be different for each department. For example, a business at a “repeatability” stage that generates inbound leads through digital marketing efforts and has an enterprise sales department will often have a much more mature marketing department than sales.
The key point is to first determine what stage your business and services are at and do only what is necessary for that stage.
The challenges of scaling up
You make a business evolve, from an organizational point of view, by overcoming many challenges. We believe that these challenges can largely be categorized into five categories:
- KPI and data.
- Documentation and authorization.
We believe it is best to address these challenges at ministerial and sub-departmental levels to make it achievable.
KPI and data
Data-driven decision making is particularly important in the T2D3 journey. It is important to realize that different KPIs are relevant at different stages. First, focus on the right measurements for your scene. An LTV: CAC (Lifetime Value at Acquisition Cost) metric is less relevant to a seed company than retention.