Investor Shelf

The Definitive Guide to Raising a Series A in the UK in 2024 (Episode 1 Ventures)

ReportEpisode 1 VenturesJanuary 202433 pages50 min readOriginal source
Key number
19%
Seed to Series A Graduation Rate p.4
Largest segment
£5M-£15M
Typical Series A Deal Size p.14
What changed
4-6 months
Series A Fundraising Duration p.7

Summary

  • According to data from Dealroom, the seed fund graduation rate to Series A is just 19%.p.4
  • The typical UK Series A deal size ranges between £5M-£15M, with typical total investor ownership of 15-25%.p.14
  • VCs require a minimum YoY growth floor of 2X or 3X for Series A investments, warning that growth under 50% can be fatal.p.8
  • The typical ARR range for a Series A investment is £1M-£3M, although overall fund ranges extend from Zero to £4m.p.14
  • Gross margin expectations have normalized post-2021, with an absolute floor set at 70% and some funds targeting 80%.p.18
  • Acceptable CAC payback periods vary by target customer, averaging 6-12 months for SMB and 12-24 months for enterprise motions.p.17

Key insights

  1. Needing £1M in ARR to raise a Series A is a myth, as select deals occur at £500k ARR or even pre-revenue if other traction indicators are exceptional.p.11
  2. Competitive landscape and defensibility are ranked among the highest due diligence priorities for Series A investors.p.22
  3. A fund size over £150M requires portfolio companies to reach £50M to £100M+ in revenue to generate necessary fund returns.p.10
  4. VCs view genuine Net Retention Rate (NDR) over 130% as world-class for proving product-market fit.p.16
  5. LTV:CAC is widely viewed by early-stage investors as an unreliable metric for seed-stage startups due to churn volatility.p.12
  6. Investors increasingly look for evidence that a startup can transition away from founder-led sales to hired sales representatives.p.21
  7. VC funds are open to small secondary share sales for founders at the Series A stage to alleviate personal financial pressure.p.12

Topics and entities

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