Where's the Money, How Do I Get It?

SaaS Series B funding readiness in 2023/2024

While there is access to growth capital in the second half of 2023 and early 2024, CEO’s must be ready to demonstrate a functional go-to-market strategy with a well-defined growth narrative in their target addressable market.

Series B funding is typically focused on Sales and Marketing as the primary levers to scale revenue growth and these go-to-market functions are closely examined for effectiveness & efficiency in the consideration for growth fund allocation – especially in the current capital market condition where sustainable growth is preferred. What is your current state of readiness and what steps should be taken now to improve your future fund-raising capability?

Where’s the Money?

James Ephrati of Lightspeed estimates there is around $1.3 trillion of dry powder funding for private equity as reported in December of 2022 by Gené Teare of Crunchbase [1].

Despite the large pool of capital available, Jason M. Lemkin of SaaStr notes the “drops in startup fundraising [in 2023] are attributed to lower valuations”[2] and Tomasz Kurczyk Tunguz of Theory Ventures observes that “Series B is the hardest round to raise in 2023”[3]

This shift in the Series B funding environment has meant that CEOs of Series A companies are rigorously performing two motions at once in the first half of 2023; extending runway though expense reduction and pivoting to efficient new revenue growth.

Jackie You, CFA , an Austin-based fractional Chief Financial Officer, provides expense reduction guidance to extend runway in four key areas:

1.? ? ? Better execution of discretionary G&A spend,

2.? ? ? Creating awareness efficiently using focused marketing spend on core ideal customer profile (ICP) to lower CAC,

3.? ? ? Optimizing innovation investment in R&D, and

4.? ? ? Right-sizing human talent to balance expense with primary OKR attainment

Andreessen Horowitz’s General Partner, Kristina Shen , defines efficient revenue growth as “being effective and prioritizing what works consistently over one-off or low-repeatability outcomes.”[4] Further, Kristina focuses on burn multiple by growth stage and begins measuring CAC payback at Series B.

So how do CEO’s prepare for the Series B fundraise?

Demonstrate your go-to-market health by efficiently attracting your most profitable customer segment, then effectively converting that interest into contract by creating impact for your ideal customers, and building the most requested capabilities for recurring impact for long-term value expansion and the next cohort of new customers for recursive growth.

• Focus on one core segment and be outstanding versus having multiple segments and struggling to be good in all
• Be detailed in your completeness of the ideal customer profile (ICP) and key buyer personas to fortify sales and marketing messaging, product development prioritization, and accurate revenue forecasting from improved win-rates
• Re-direct and re-focus marketing spend on efficient CAC in your core ICP, be relentless in knowing where marketing budget is spent and how that relates to customers voting with their investments by way of contracts by tracking your campaigns to contracts in your CRM – measure and monitor this weekly to maximize runway
• Know your customers behavior by cohort to assess long-term trends in unit economics (LTV, Churn) and prepare growth scenarios for above/expected/worst cases to show you have a strong grasp of the relationship between financial and growth metric performance

Final note ? Getting help in these areas is a learn it, buy it or lease it proposal

Consider leveraging interim or fractional experts to assist in achieving your readiness for Series B and future funding rounds.

Questions, issues, concerns feel free to read out.

Best of luck in your next round of funding

#seriesB #gotomarket #revenueoperations ##CRO #fractionalCRO

[1] Forecast: VCs Stockpiled Record Funds This Year. Where Will All That 'Dry Powder' Go In 2023? (crunchbase.com) accessed 25-June-2023

[2] Dear SaaStr: Why Are We Seeing Such a Big Drop in Startup Fundraising? | SaaStr accessed 25-June-2023

[3] The Hardest Round to Raise in 2023 | LinkedIn accessed 25-June-2023

[4] Increasing Runway Without Sacrificing Growth with Norwest Venture Partners and Andreessen Horowitz (youtube.com) accessed 25-June-2023