Critical Metrics for Raising a Series A & B
The Artemis Fund believes technology can create prosperity for all, but it’s not possible without diverse perspectives. Artemis leads seed rounds for diverse tech founders with wild ambitions in fintech, commerce, and care building the economy of the future.
Raising capital has always been a complex and challenging process, but in today’s market, the competition is even more fierce. Moving from Seed to Series A — and eventually to Series B — requires not just a great product, but a deep understanding of the metrics that investors value most. From revenue growth to customer acquisition efficiency, startups need to hit specific milestones to stand out.
Getting from Series Seed to Series A
Getting from Seed to Series A has always been hard, but the stakes are even higher now.
- In Q1 of 2018, 27.4% of startups made it from Seed to Series A within two years.
- In Q3 of 2020, the journey hit an all time high, with 37.3% of startups making it there in that amount of time.
- As of Q1 of 2022, that number is at 12.1%.
Why? The reasons are myriad- changing interest rates, inflation, the correction period we’re now experiencing from the pandemic era boom, and startups changing their day to day operations (layoffs, reductions in spending).
Based on our research at The Artemis Fund, a few things have to line up to successfully raise a Series A.
- Revenue Target: $2–3M
- Gross Margins: 70–80%
- Profitability Timeline: 12–24 months
- Key Success Factor: Running a structured process
For additional reading on this topic, we recommend this Seed to Series A framework from Unusual Ventures.
Getting from Series A to Series B
Getting from Series A to Series B is a critical step, and it’s never been more challenging or taken as long (31 months!) as right now.
Why? There could be a number of reasons: latency in the market, the possibility that post Series A companies are acquired or fail at a substantial rate, or the number of Series B funds not keeping pace with seed funds that catalyze Series A rounds.
Based on our research at The Artemis Fund, a few things have to line up to successfully raise a Series B.
- Run-rate Revenue: The best companies are hitting over $10M, with “good” benchmarks between $7–10M.
- YoY Revenue Growth: A 5X growth or higher places you in the “great” category, but even 2–5X is strong.
- LTV:CAC: A ratio of over 5X shows a solid return on customer acquisition, which is key to long-term scalability.
- Gross Margin: Top performers exceed 85%, allowing for greater reinvestment in growth.
For Enterprise SaaS models:
- New Logo ARR: The top companies are securing over $2M in new business annually.
- Monthly Churn: Best-in-class companies keep churn below 1%.
For Marketplace models:
- GMV (15% take): Hitting over $40M in gross merchandise value is what defines top-tier success.
What to Consider Besides the Quantitative
There are also soft metrics you should hit at both Series A and Series B. These include considerations around your team, market, product, and GTM strategy.
As the journey from Seed to Series A and beyond becomes more challenging, understanding the metrics that define success can be the difference between just surviving and truly scaling. Successful startups align on revenue targets, profitability timelines, and growth metrics to stand out in a crowded market.
By focusing on both the qualitative and quantitative factors, founders can navigate the evolving path to sustainable growth.
Learn more about the companies in our portfolio on our website. If you’re a founder innovating in commerce enablement, fintech, or the care economy, pitch us here!
