Alliance Partners

Friday, August 02, 2024

Figma raised a $3.8M Seed + a $14M Series A all pre-revenue




Michael Ho - who focusses on preparing seed stage founders for series A - has an amazing insight!!!

❌raising money isn’t about revenue ❌

In fact it was 3+ years before Figma had any of the common traction metrics (users, revenue, growth)

Sandvine, the first startup Michael worked for raised a $19.5M seed round pre-traction / pre-product right after the dot-com crash…

And Kinde raised $11.5m a few years back on a piece of paper !!!
So clearly it’s not always about traction either

Okay then… So what is it about?

🤩 Raising money is about investors believing in your (future) ability to hit Venture Scale

Does (historical) traction help? 

Sure - but not always!!!

The key is to clearly articulate the 10X factor 

There’s only a very few that’ll be able to raise with zero traction which is usually about 
→ the team or 
→ some crazy breakthrough
Traction doesn’t always equal funding 🤯
Many Starrups were sold a story
→ if you get to X traction = you’ll be able to raise
→ Growing 2-3x yoy = successful raise
→ $3M ARR = Series A

And so they put their heads down, burn through their runway, hit those metrics to eventually pop their heads back up and realize only then that it’s not enough

But now they’re almost out of runway 😞

Michael’s company , Sandvine  doubled revenue, had big customers with thousands of users and finally crossed $5M 🙌 - 

But then struggled to raise their next round
→ they had traction??

VCs look for leading indicators vs lagging indicators 

To have belief that they will get  the $1M to $100M in 7 to 10 years venture scale curve

What are some of the leading indicators 

It’s not always about month on month growth 
→ grow at 10% mom for 24 months straight
→ and 6% mom for the next 3 years 🚀

It could be 
 ICP, 
growth tactics,  
stage ,  
opportunity and industry , 
belief in the team , 
gut & intuition on the investors side ,
 belief by those who have influence ! 

The golden nugget 

Find out what those leading indicators are and use that as your roadmap 💪

What are some of your Leading Indicators? 

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