A venture capitalist explains how Series A funding got harder during COVID. Startups now need longer cash runways, more milestones, and proof they can raise Series B. The VC won't fund a company he likes if he doubts it can raise the next round.
Have requirements changed for the Series A in your mind, the metrics, standards, etc.?
Yes. It's harder. It's definitely gonna be harder, and there's some new requirements. As an example, the cash has to last longer, right? We have to assume that the next round is going to be harder. You're gonna have to hit more milestones. You're gonna have to separate yourself more to that Series B investor whose standards have gone up also. And we don't know what the next year's going to hold, right? So it could be pretty chaotic and we're going to need an extra year of cushion beyond that to make sure that you can achieve some great milestones and still have time to raise money. That's the biggest one.
[Speaker:TREY_LOCKERBIE] So you always have told me, and this is one of the best things I've ever heard a VC say, that the way you evaluate a deal is their ability to raise the next round, right? You may love the company, you may love the business, but if they can't raise the next round, you're, it's not great.
[Speaker] It's a fundamental part of our criteria. They have to be a good fundraiser. It's also the same thing as being a good recruiter, right? You have to be able to get great partners to come into your business, whether that's a financial partner, an employee, a business development partner, whatever it is. You have to be very attractive to those groups in a lot of ways.
