On the journey to Series B, strategy is more important than metrics


A chess figure casts the shadow of a different figure on an image midway through the photo and the illustration.
Image Credits: miguelangelortega (opens in a new window) / Getty Images

Ophelia Brown


Ophelia Brown is the founder of Blossom Capital, an early-stage venture fund.

Software founders have never had so many metrics thrown at them by VCs on how to run a business. Across social media, in newsletters and at events, it’s been hard to escape charts on measuring CAC, cash burn, growth and efficiency.

We’ve never believed that great businesses are built solely on metrics or KPIs. Rather, we guide founders to build a strategy that helps them understand when to grow, when to pull back, when to spend and when to save.

Below, we’ve put together some answers to the questions we keep hearing around growth and fundraising.

What’s the goal of the journey from Series A to Series B?

Just as the journey from the seed to Series A stage is about finding product-market fit, the journey from Series A to B is also defined well.

The purpose of the capital raised at Series A is to take the company from initial signs of product-market fit to having predictable revenue growth.

By the time of your Series B, you’re expected to have a go-to-market engine that lets you know if you invest $1 into sales and marketing, you’ll get $X back (hopefully, X is more than $1).

It’s helpful to have that goal in mind when planning your spending and team structure.

Most common mistake: Getting to Series B without a scalable go-to-market plan.

How aggressively should we grow this year?

In 2021, the answer would have been to grow as fast as possible, regardless of burn. In 2022, you’ve been told to forego growth and pursue profitability. We say: Don’t let the financial markets dictate your strategy.

There is no definitive answer to this question. Just remember that you raised money to capitalize on an opportunity not to preserve cash. As a founder, you should be comfortable with taking risks, but that doesn’t mean you should be reckless. There’s a difference between cutting back on spending because the opportunity isn’t evolving as expected and running out of cash at short notice.

Fortune favors the brave. If you are benefiting from structural tailwinds, now is not the time to pull back.

Most common mistake: Being overly focused on cash preservation over growth when things are working.

How should we plan our spending?

For each year, make plans for best- and worst-case scenarios. With so much economic uncertainty, it’s advisable to adjust your plan every quarter.

You can also safeguard against uncertainty. Deals often fail unexpectedly because of budget cuts or layoffs. Deal with this by budgeting for a bigger sales pipeline than you think you’ll need.

Take your expected conversion rate at each stage and reduce it by 20%. That will help buffer against unexpected losses.

Every role should be considered to be generating revenue. Maximize the productivity, and therefore revenue, of your team. Are product and engineering shipping features fast enough to unlock more revenue? Are the sales team maxed out for demos? Are the leads from marketing actually converting to closed customers?

Most common mistake: Being overly optimistic about revenue assumptions and not allowing a buffer for things going wrong.

How should we think about runway and capital preservation?

Capital is no longer abundant, so it is sensible to think about the cost of growth and how far the money needs to go.

How much runway you maintain should be a function of how much you need it.

If you’re confident in the opportunity, customers are banging on your door and selling is easy, then you can afford to be more aggressive in your spending to accelerate growth.

On the flip side, if your account executives are missing targets, or the product-market fit doesn’t seem to be working for a broader customer base, then it’s time to slow down spending to gain room to experiment and figure out what works.

Most common mistake: Not knowing which category you fall into. Scaling when things aren’t working just amplifies problems rather than fixing them.

Plan with strategy, not metrics

Early-stage companies are, by nature, quite different from public tech businesses or companies further along in their journey. Rather than following metrics that might have worked elsewhere, your role as founder is to be responsive, agile and anticipative. That puts you in control.

If it were as easy as following a single roadmap, many more founders would find success. The best founders take as much advice as they can, but they know their business well enough to understand what will work and what won’t.

Knowing where you want to get to is only half the battle; finding the right way to get there is key. Forget about planning your business based on the metrics of the past decade. We live in a new world order.

More TechCrunch

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

16 hours ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

18 hours ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo

Sony Music Group has sent letters to more than 700 tech companies and music streaming services to warn them not to use its music to train AI without explicit permission.…

Sony Music warns tech companies over ‘unauthorized’ use of its content to train AI

Winston Chi, Butter’s founder and CEO, told TechCrunch that “most parties, including our investors and us, are making money” from the exit.

GrubMarket buys Butter to give its food distribution tech an AI boost

The investor lawsuit is related to Bolt securing a $30 million personal loan to Ryan Breslow, which was later defaulted on.

Bolt founder Ryan Breslow wants to settle an investor lawsuit by returning $37 million worth of shares

Meta, the parent company of Facebook, launched an enterprise version of the prominent social network in 2015. It always seemed like a stretch for a company built on a consumer…

With the end of Workplace, it’s fair to wonder if Meta was ever serious about the enterprise

X, formerly Twitter, turned TweetDeck into X Pro and pushed it behind a paywall. But there is a new column-based social media tool in town, and it’s from Instagram Threads.…

Meta Threads is testing pinned columns on the web, similar to the old TweetDeck

As part of 2024’s Accessibility Awareness Day, Google is showing off some updates to Android that should be useful to folks with mobility or vision impairments. Project Gameface allows gamers…

Google expands hands-free and eyes-free interfaces on Android