What is Series A?
Series A is the first significant round of venture capital financing. Unlike seed rounds, which often come from angels, accelerators, and early-stage funds, Series A is led by institutional venture capital firms with larger fund sizes and more rigorous investment criteria.
In India, Series A rounds typically range from ₹10-40 Crore ($1.2-5 million USD) and represent a major inflection point for startups. At this stage, investors expect to see product-market fit, meaningful traction, and a clear path to scalability.
Series A Characteristics
- • Check Size: ₹10-40 Crore ($1.2-5M) typical range
- • Investors: Institutional VC firms (Sequoia, Accel, Lightspeed, etc.)
- • Focus: Proven product-market fit and scalable business model
- • Valuation: ₹30-100+ Crore pre-money typical
- • Dilution: Founders typically sell 15-25% of company
- • Time: 3-6 months from start to close
When to Raise Series A
Timing your Series A correctly is crucial. Too early, and you will not have the metrics to attract quality investors. Too late, and you may run out of runway or miss market opportunities.
Signs You Are Ready
- • Consistent Revenue: ₹2-10 Crore ARR (varies by sector)
- • Strong Growth: 3x+ year-over-year growth rate
- • Retention: High customer retention / low churn
- • Unit Economics: Positive unit economics or clear path
- • Product-Market Fit: Evidence of market demand
- • Runway: 6-9 months of cash remaining
Signs You Are Not Ready
- • Revenue is flat or declining
- • High churn or low engagement
- • Unproven business model
- • Less than 6 months runway
- • Key team members missing
- • Product not yet launched
Series A Metrics by Industry
Expected metrics vary significantly by industry. Here are benchmarks for Series A in India:
| Metric | SaaS/B2B | Consumer/Marketplace | Fintech |
|---|---|---|---|
| ARR/Revenue | ₹2-8 Cr | ₹5-15 Cr | ₹3-10 Cr |
| Growth Rate | 3-5x YoY | 5-10x YoY | 3-5x YoY |
| Retention | >90% gross | High MAU/DAU | Low churn |
| Payback Period | <18 months | Unit positive | <12 months |
| Team Size | 15-30 | 20-50 | 15-40 |
Important Note
These are rough benchmarks and vary based on market conditions, team quality, and other factors. Exceptional teams with strong traction may raise with lower metrics, while others may need higher metrics depending on the competitive landscape.
Preparing Your Materials
Having professional, comprehensive materials ready before starting the fundraise will significantly improve your chances and speed up the process.
Essential Materials
Pitch Deck (15-20 slides)
- • Problem and Solution
- • Market Size (TAM/SAM/SOM)
- • Product Demo/Screenshots
- • Business Model
- • Traction and Metrics
- • Competitive Analysis
- • Go-to-Market Strategy
- • Team
- • Financial Projections
- • Use of Funds
Financial Model
- • 3-5 year projections
- • Revenue and expense assumptions
- • Unit economics analysis
- • Cash flow forecast
- • Historical financials
Data Room
- • Legal documents (incorporation, contracts)
- • Financial statements
- • Tax returns and filings
- • Customer contracts
- • IP documentation
- • Team resumes
Team Preparation
VCs invest in teams as much as ideas. Your team needs to be prepared to demonstrate capability and commitment.
Key Hires Before Series A
- CTO/Technical Lead: If not already on founding team
- Head of Sales/Growth: Proven revenue generation
- Key Engineers: Product development capacity
- Finance/Operations: Professional management
Founder Preparation
- • Clear role definitions among co-founders
- • Aligned on fundraising strategy
- • Ready to answer tough questions
- • Committed for the long term
- • Vesting in place (if not already)
Crafting Your Narrative
Your story needs to be compelling, coherent, and supported by data. Investors hear hundreds of pitches - yours needs to stand out.
Key Narrative Elements
- The Problem: Clear, significant, and relatable
- The Solution: Elegant, differentiated, scalable
- The Traction: Evidence that it is working
- The Market: Large and growing
- The Team: Uniquely qualified to execute
- The Vision: Ambitious but achievable
Anticipating Tough Questions
- • "What if [competitor] does this?"
- • "Why has this not worked before?"
- • "What is your customer acquisition cost?"
- • "How will you use this capital?"
- • "Why is now the right time?"
- • "What are the risks and how will you mitigate them?"
The Fundraising Process
Series A fundraising is a structured process that typically takes 3-6 months from initial outreach to closing.
Phase 1: Preparation (2-4 weeks)
Prepare materials, update data room, refine pitch, identify target investors.
Phase 2: Outreach (2-4 weeks)
Initial meetings with VCs, pitch presentations, follow-up materials.
Phase 3: Diligence (2-4 weeks)
Multiple meetings, data room access, reference checks, partner presentations.
Phase 4: Term Sheet (1-2 weeks)
Receive term sheet(s), negotiate terms, sign term sheet with exclusivity.
Phase 5: Closing (4-6 weeks)
Legal due diligence, definitive docs negotiation, final closing.
VC Outreach Strategy
How you approach VCs can significantly impact your success. A strategic approach yields better results than mass emails.
Building Your Target List
- • Stage-appropriate funds (active in Series A)
- • Sector-focused investors (understand your space)
- • India-focused or India-present funds
- • Check size match (₹10-40 Cr target)
- • Dry powder available (recent fund raises)
Warm Introductions
- • Portfolio company founders
- • Angel investors in your network
- • Accelerators and incubators
- • Lawyers and advisors who know VCs
- • Industry events and conferences
Term Sheet Negotiation
Once you receive term sheets, the negotiation phase begins. Focus on what matters most.
Priority Terms for Founders
Must Protect:
- • 1x non-participating liquidation preference
- • Weighted average anti-dilution (not full ratchet)
- • Reasonable vesting (4 years with 1-year cliff)
- • Board control or meaningful representation
Important:
- • Valuation (but terms often matter more)
- • Option pool size and treatment
- • Protective provisions scope
- • Drag-along threshold
Getting Multiple Term Sheets
Competition is your best negotiating tool:
- • Run a tight, time-bound process
- • Be transparent (but not too transparent) about interest
- • Use one term sheet to improve another
- • Consider both price and partner quality
Closing the Round
After signing the term sheet, the final phase involves legal due diligence and definitive documentation.
Legal Due Diligence
- • Comprehensive document review
- • Legal and regulatory compliance check
- • IP ownership verification
- • Contract review
- • Team background checks
Definitive Documents
- • Share Purchase Agreement (SPA)
- • Shareholders Agreement (SHA)
- • Disclosure schedules
- • Board and shareholder resolutions
- • Legal opinions
Common Mistakes to Avoid
- Starting Too Late: Begin process with 6-9 months runway
- Poor Preparation: Incomplete materials or data room
- Unrealistic Valuation: Pricing yourself out of market
- Wrong Focus: Prioritizing valuation over partner quality
- Process Mismanagement: Taking too long or poor coordination
- Negotiating Everything: Fighting over minor terms
- Lack of Transparency: Surprising investors in diligence
- Ignoring Red Flags: Overlooking concerning investor behavior