The “Series A-Ready” Framework (4 Pillars)

We’ve broken it down into four simple pillars:

• Solid PMF

• Capital Efficiency

• Sales Efficiency

• NRR

Solid PMF (an "Oh Sh$T, something is happening here)

The easiest way to show this is with revenue (ARR) between $1M and $5M and a fast path there.

If it took you three years to reach $1 M in ARR, it suggests a grind with lots of convincing and no escape velocity. If it took you three months to reach $1 M in ARR, investors will be excited by that trajectory.

But a lot of times revenue might just be the lagging indicator of showing investors that something amazing is happening. If you're a B2C app it might just be thousands of users in a very short time period. Even if you're B2B, if you can show that you have accomplished something incredible that also might be enough, examples of this are Divvy and Ramp who had lower than $1M in ARR when raising their A but were able to show a very compelling product with tons of users that would turn into future monetization.

Capital Efficiency

No one expects you to be profitable yet (bonus points if you are), but you must show you’ve been a good steward of capital.

A simple metric is your burn multiple.

Calculate it by taking last month’s net burn and dividing it by new ARR. If you burned $100 K last month and added $50 K of ARR, the burn multiple is 2—too high, meaning you’re spending too much.

Burn multiple < 1.5× signals best-in-class efficiency; Series A winners average 1.0–1.7×.

Sales Efficiency

A quick way to show your marketing spend isn’t out of control is to reveal your magic number.

Magic Number = (Revenue Current Quarter – Revenue Previous Quarter) ÷ Previous Quarter Sales & Marketing Spend

It shows whether last quarter’s marketing spend drove this quarter’s revenue efficiently.

A Magic Number ≥ 0.75 tells investors each $1 in S&M turns into $1 of new ARR within a year. The bigger, the better. If you can show you spent $1 and got $2 of new ARR, that’s ideal.

Retention, Retention, Retention

Investors want to know today’s revenue will stick. The simplest proof is data on renewals, expansions, and contractions.

NRR = Starting MRR – Contraction + Expansion – Churn

If NRR is above 100 %, expansions outweigh churn and contraction, indicating customers will stick around.

Summary

Show investors you’ve found something the market rushes to buy, that you haven’t had to convince the market by dumping money into marketing, and that you’ve treated capital wisely—with the cherry on top that your customers will stay.