Raising a Series A is extremely tough, and can be a black box for founders. A lot of the guidance on blogosphere is around what metrics to target for a Series A. Yet, from an investors perspective, the Series A is more of a qualitative decision vs. a metrics-driven decision. In this session, Nakul Mandan, Partner at Lightspeed Venture Partners, talks about the 5 qualitative factors VCs look for in a SaaS startup at the Series A stage.

1. BEYOND THE METRICS:
5 QUALITATIVE FACTORS VCs LOOK
FOR IN A SERIES A STARTUP
NAKUL MANDAN
Partner
Lightspeed Venture Partners
@nakul

2. Nakul Mandan
Partner
Lightspeed Venture Partners
@nakul
Beyond the Metrics: 5 qualitative factors VCs look for in a
Series A Startup

3. Ingredients Of A Great Software Business
• Generic answer to “What VCs look for?”: Market + Team (duh!)
• Five questions I ask:
• Why now?
• Product/category: role of product in the buyer and user’s life?
• Market size: current and extensible?
• Is there an efficient go-to-market / distribution strategy?
• Long term moat: Data / Network / Engagement. What’s the lock in?

4. Why Now?
• What macro trends are coming together to make this
opportunity happen right now?
• Demand / Supply side?
• Is the user behavior changing to create this market
opportunity?
• Has the user/buyer been trained recently to look for the solution
you’re offering?

5. Product Category
• Role of product in the buyer and user’s life?
• Is it mission critical?
• Is there an opportunity to evolve the product into a platform?
• Is there an opportunity to be sustainably differentiated?
• If not, is there at least first mover advantage?

6. Market Size
• Always size the market bottoms-up: number of target
customers x customer budget for this problem
• Is the customer willing to pay up for the best solution?
• Can the addressable market be expanded over time?

7. Go-To-Market Strategy
• Is the buyer already in the market looking for a solution?
• Is there a way to establish viral / word-of-mouth based
distribution?
• Is the customer budget for this problem enough to justify the
sales and marketing investment?
• Key business decision to make: which segment to focus on and
pricing
• Oft-repeated mistake: Take any customer who agrees to pay
something!
• Important to figure out which segments don’t matter to the long term
success of the business

8. Long Term Moat
• Is there a network or proprietary data based moat?
• Does feature parity imply product parity?
• Not good, if so!
• Can scale beget scale?

9. THANK YOU