A Series A company is a working scale model of a billion-dollar opportunity.

Startups go through three phases. In VC parlance, these phases are “seed,” “venture” and “growth.” The seed stage is the search for product-market fit. During this phase you might raise money in rounds with names like “angel,” “pre-seed,” “seed,” etc. You might have a small team or not; a product or not; a few customers or not. In any case, you’re hunting for a product that a large market desperately wants, and a repeatable source of customers in that market.

In general, VC pitches at the seed stage are about a multi-billion-dollar opportunity that the founders see, and the founders’ ability to build a company that captures this opportunity. A few proof points (team, product or customers) might exist but in general these are just examples to prove that the founders can do these things. These proof points are so few that they have no value in themselves. 

After raising some rounds at the seed stage, if your startup is lucky enough to find product-market fit, you’ll start scaling it up and building out the company. Typically at this point, you’ll raise a Series A. A proper Series A marks the graduation of the company from the seed stage to the venture stage. 

For that reason – that it’s a graduation point and often a coming-out party for the company – seed-stage founders and their employees are forever asking what “Series A metrics” are. Embedded in this question is the assumption that these metrics are thresholds: That companies who hit these metrics will raise a Series A, and that companies who miss these metrics will not raise a Series A. This is, of course, nonsense. There’s no such thing as Series A metrics.

But there is such a thing as a Series A company. If a seed stage company is a $1B+ opportunity with founders who can credibly attack that opportunity, then a Series A company is a fully-functioning microcosm of the $1B company you will become. 

This means, to be a Series A company, you have built and launched the very product that you will sell to all those thousands of prospective customers. You have also built a functioning scale model of the go-to-market motion. If you’re doing outbound sales, then SDRs are in place and sourcing opportunities, and your first team of AEs is ramped up and closing deals. If you need customer success or support, then those teams are onboarded and succeeding. You have at least one real finance person and (for the love of God) real financial statements.

Much is still to come: The leaders of these functions, the org chart, the systems and coordinators and managers and backoffice staff will all get added in time as you grow from venture stage to growth stage. But before all that, to be a Series A company, you should be able to take the P&L and the customer file, show them to an institutional investor, and use them to demonstrate what this company will look like at scale. You can see the company’s business model, margins, cost of customer acquisition, average deal size and net dollar retention, right there in the financials. You can have some confidence that what you’ve built, once you 100X it, will be an incredible company.

How big is the revenue number at this point? It really depends. A company selling six-figure enterprise deals might get to $2M ARR on just half a dozen hero-mode deals, but have no repeatable go-to-market motion to speak of. But an SMB company might be an efficient, rapidly-growing machine at $400k. (Or that same SMB company might be $4M by the time it irons out the product issues that caused lumpy, unpredictable growth.) What’s important is that it’s repeatable and repeating.

Most importantly, the growth rate of the company needs to be high enough and predictable enough that we all truly believe it’s a $1B+ opportunity. Lots has been written about exact growth rates at various stages, and how much is too much to spend on an incremental percentage point of growth. It is true that all else being equal, higher is better. But most important is that you are executing a machine that puts up impressive and predictable numbers every month and quarter. That machine should be growing fast enough that the path to billions in enterprise value is real, it’s credible, and it’s measured in a single-digit number of years.

Founders who ask, “What are Series A metrics?” live in a world they learned in school. A world where students who got passing grades in every class got to graduate, and the student with the most A’s went to Harvard. A world where you ask your manager for the expectations, you make sure to exceed each one of them, and then you get the promotion. 

That is not the world of startups. In blazing our own path, we walked away from the world of grades and performance reviews. We chose the world where we’re judged by the market on the real-world value of what we have created. We’re crazy enough to think we can build billions of dollars in enterprise value. At first, all we have is a team of founders and a pitch. By Series A, we have a functioning scale model, winning in the market, ready to be scaled up until it’s worth billions of dollars.