So to raise seed and post-seed money from VCs, you need to show traction.
What’s that? Roughly:
- Before $1m ARR, growing 10%-15% a month
- Around $1m ARR, growing 8%-10% a month or so
- Around $10m ARR, ideally doubling
Etc. Being on track to Triple Triple Double Double after $1m ARR, and growing faster earlier than that.
But what if you’ve been going through a rough patch?
VCs get it. They know start-ups take a while to truly nail product-market fit and more. They know hypergrowth often follows a short or long period of iimited growth.
So net net, what VCs want to see is 3+ strong months of growth in a row. Even if the prior 3-30 were … slow. It’s OK.
The advice here is simple, but many founders get it a bit wrong. If you’ve had a rough year, and then one great month of growth — well, that’s not enough for VCs. But put together 3 strong months, and go fundraise hard.
3 strong months a row is enough for VCs to believe; That the next 30-300 months will be epic, too.
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- Source: https://www.saastr.com/the-three-months-of-strong-growth-rule-in-raising-venture-capital/