8 ways to guarantee you raise a Series A.

by | Jul 2023 | Early-Stage Capital

According to the founder of Match, if you can demonstrate the following 8 characteristics, your startup has a very strong chance of closing a Series A funding round. They’re not the obvious ones, so perhaps you haven’t considered them.

I’ve known Peng Ong by reputation for almost a decade and met his co-founder at Monk’s Hill Ventures, Kuo-Yi Lim, several times. They were investing in Singapore throughout the 8 years I spent living there, and they had a reputation for being one of the more circumspect but reputable VCs in Southeast Asia.

Having spent several hours with Kuo-Yi, I can report first-hand that these guys are super-smart, invest their own money, and are successful entrepreneurs as well as investors.

What to work on

Peng believes the best startups, i.e. those most likely to scale quickly and significantly, share the following 8 characteristics.

01. Ongoing accumulation of proprietary data

Does your startup accumulate differentiated proprietary information, which adds value and expands your moat exponentially?

02. Positive unit economics and high gross margins

Except while searching for PMF, does your startup have positive and growing unit economics, with the possibility of >50% gross margins.

03. AI-powered relationship management

Can you use artificial intelligence not just to generate transactions, but also to build and maintain long-term customer relationships?

04. A philosopher-warrior-nurturer founder

Do you as a founder exhibit extreme clarity (philosopher), action (warrior) and the ability to motivate your team (nurturer)?

05. Minimising product-market-fit risk

Are you thoughtful about minimising PMF risk, perhaps through a blended business model or by doing things faster, cheaper, smarter?

06. A reasonable path to “R + K > 1”

Can you control growth with no direct acquisition cost because your product’s retention (R) plus virality coefficient (K) exceeds 1? This means you can grow organically with no direct cost of acquisition (if you want to). As Peng explains, that means the company is in full control of its growth levers, as opposed to paid acquisitions where the CAC is effectively controlled by the distribution channels.

07. Inherent lock-in

Does your product become harder to leave the more it is used, such that customers come to depend on it and find themselves locked in?

08. Hyper-Kaizen

Have you as a founder identified opportunities to improve different business systems and metrics, year-on-year, by double-digits?

Cheat sheet

I recommend checking out Peng’s original article, but to keep things easy for me, our DQ portfolio founders, and for anyone else who wants to remember these tips, we created the following one-page summary:

What top investors look for in a Series A startup

If you’re out there preparing for, or raising a Series A, I hope this might help. Best of luck!

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– Midjourney

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