The Myth of $1M ARR: How To Know When You’re Ready for Your Series A

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The Myth of $1M ARR: How To Know When You’re Ready for Your Series A
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The most common question I get from founders building B2B startups is what metrics they need to achieve in order to raise their Series A.
When you are building a B2B SaaS startup in an established category, you can win against competitors and incumbents by building a better product, but that is usually not enough.
If you are building a performance management, collaboration, or recruiting app, for example, you better have amazing traction and metrics.
Often times the magical $1M in ARR is not good enough to demonstrate good traction and execution.
But, generally speaking, the more established the market, the higher the need for great execution and, thus, emphasis on metrics.
New Disruptive Products or Markets
On the other extreme, there are startups building products that are so different, new, and innovative, that they do not fit in any traditional market or category.
Traditional metrics around ARR or traction often do not apply.
It is usually too early to judge such startups based on traditional SaaS metrics.
For such startups, the generic advice for Series A metrics and traction does not make sense.
If you are building an infrastructure product or a startup focused on selling to large enterprises, my guidance and thought process is also different.
Most infrastructure startups and enterprise tech startups fall short of their potential because either the product fails to deliver substantially better performance, or they simply cannot crack the complicated sales process required to penetrate large enterprises.
Thus, when I am looking at infrastructure and enterprise tech startups, I certainly care about the product and the opportunity, but even more importantly, I want to know that sophisticated customers are willing to write a sizable check for the product.
I usually want to see at least three customers willing to commit at least $100K per year for the product, with some open source companies being the exception

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