As I’ve been recruiting, onboarding, and coaching lately within DataGrail, I frequently touch on the topic of the company’s stage.

Folks make observations or have questions about where we are, where we’re going, problems we’re encountering, and what the right set of trade-offs to optimize for are.

One of the models that I come back to is our stage of company. I find it a useful tool to frame a larger discussion about what we’re working toward at this moment as a company.

It uses fundraising rounds as a lens for the problems that a company is focused on. What does each of these rounds buy an investor and focus the compnay on?

n.b. this model biases toward B2B SaaS companies.

Seed

You’re paying for the company (really the founders at this point) to find a market problem that people are willing to spend money to have solved.

You’re discovering what the job to be done is.

Usually this involves building an alpha or POC version of a product.

Shortcuts are taken on the path to validating that this is a worthy problem.

Series A

You’ve proven that your problem matters to people.

Now the goal is to build a product that you can sell repeatedly.

Again, perfection is not the goal; iterating quickly is. By the end of A, if you’ve done it right, you’ve built yourself a product with market fit.

Series C

Before we move on to series B, it’s useful to first jump to C. By the time you arrive at a C round, you should have a repeatable go-to-market motion. You should have playbooks. You should have an excellent product that can take off without the company collapsing under the weight of its own success.

We’re about to hit the steep part of the hockey stick and the money from this round buys you gasoline to pour on the 🔥. Building out a robust salesforce, hiring engineers to expand product surface area rapidly, pursuing new channels and verticals.

Let’s go.

Series B

So if A is about hitting the groove of product-market fit and C is about pouring gasoline on the fire, B is about tuning the engine of the company.

The goal here is to build a strong, repeatable GTM engine and a robust product that requires sublinear human effort to grow in usage.

In other words, engineer the business.

Series D and Beyond

The meaning of rounds at this point become fuzzier. D can be a mezzanine to something bigger like an IPO. For example, prove to the public markets ahead that you can acquire companies, integrate them, and grow non-organically. Or show that you can deliver on multi-year strategic plans.

Series D for a company that has executed through C well though is a tee up for the big leagues.

Each of these rounds is critical, but to me the first 3 are the hardest to get right.

The plumb line moving from seed to A and A to B and B to C needs to be true. Small misalignments compound and become much costlier the further you go.

So nail the purpose of the round when executing and you’ll have better problems to focus on. 📈