The "Magic" of Series A

What’s the secret of success for founders looking toward a Series A raise?

Is the “magic” in the metrics—or somewhere else?

The question came at me again on a recent group call with several founders. One founder had been told every successful pitch deck needed a chart that was “going up and to the right.” This, he’d been informed, was the “magic” that would open the investment floodgates.

But he didn’t have a chart like that.

What was he supposed to do instead?

I wasn’t surprised to hear this founder’s concerns about having not one “magic” chart. A lot of people come to me with the same basic problem: “My chart doesn’t look that good.”

Of course, showing traction is a very good thing. The more the better.

But what if you don’t have it? Or enough of it? And what is enough, anyway? 

My advice was to look beyond whatever metrics and proof points quantify his business today.

At the Series A stage, the objective data can only tell investors so much.

What’s more important is the subjective—the “magic” is how Series A investors feel about what this opportunity offers them.

Disclaimer: Of course, there are exceptions to every rule. But my guess is that if you already have a truly “magic” chart that demonstrates the adoption and growing demand for your product, backed up by proof that there is a truly giant bucket you can still unlock, you’re not reading this blog post.

So, what do you do if you don’t have that one perfect chart that will satisfy every investor?

Start by putting yourself in your potential investors’ shoes. At the Series A stage, they are buying your future, not your past.

The fact that you are at one million or two or three in revenue right now doesn’t really tell investors anything about how big your company can be. The actual revenue at this moment in time is less important than the buying signals, the repeatability of your revenue model, and the long-term expansion possibilities.

At the Series A stage, investors need to be excited about the leadership, the vision and the team. They want to see that you know your competitors, you know the market, that you’ve got something special to offer—and both the focus and the vision to get there.

Series A investors understand that there’s no way you can execute on your whole vision at once across every market. That’s why they want to hear what you’re focusing on right now and how it builds a bridge towards achieving your vision.

Even without a “magic” chart, you still need to make the best objective case you possibly can. You need a pitch deck. You need to show metrics and proof points. You need to come armed with the hard data that helps make your case.

But don’t be too focused on making investors believe in you because of one chart. If that’s what your story is built on, you’re far more likely to be given more homework—to be sent away to make an even better chart based on metrics your investor would like to see. You might even get additional “suggestions” that skew your current focus or don’t align with your overall vision as a company.

So bring the data. Talk about your progress. But use the data to pitch the “magic” too. Make a credible case about how big your business can be—and why you and your team are uniquely equipped to make it happen.

Yes, it’s subjective. But all Series A investing begins with a leap of faith.  If Series A investors believe in you and can easily imagine you achieving your vision, they will also be excited about the kind of exit they might achieve by investing in you early.  

And that’s the true magic of attracting Series A investors.