The SaaS Series A to Series B Traffic Jam Is Real

The SaaS Series A traffic jam. Graduating from Series A to B is historically difficult right now.

Across the US, the percentage of SaaS startups that have made it from their Series A to their Series B in under 2 years has fallen every year since 2020.

Let me explain the chart below as it's a little complex.

Left-hand column is year of the Series A fundraise (primary rounds only). Also shows the total sample size for this analysis in that year.

Teal bubble shows the percentage of startups that got from their Series A to their Series B in under 1 year (super fast). Green bubble shows the same percentage but extended to under 2 years (still pretty quick).

Grey bar on the right shows the total percentage of startups from that year that have made the jump from A to B (so far). Obviously this means the time-period is longer for earlier years.

𝗞𝗲𝘆 𝘀𝘁𝗮𝘁: 𝗼𝗻𝗹𝘆 𝟭𝟬% 𝗼𝗳 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝘁𝗵𝗮𝘁 𝗿𝗮𝗶𝘀𝗲𝗱 𝗦𝗲𝗿𝗶𝗲𝘀 𝗔 𝗶𝗻 𝗛𝟭 𝟮𝟬𝟮𝟮 𝗿𝗮𝗶𝘀𝗲𝗱 𝗮 𝗦𝗲𝗿𝗶𝗲𝘀 𝗕 𝗶𝗻 𝘂𝗻𝗱𝗲𝗿 𝟮 𝘆𝗲𝗮𝗿𝘀.

Of course this analysis only gives us the facts, not the reasons. Why are Series A companies taking so much longer to raise B?

It may be a structural reason (look at how many more Series As were done in 2021, those add to the traffic on this particular road). It may be that the metrics needed to hit Series B have greatly increased. It could be that recent Series A companies 𝘥𝘰𝘯'𝘵 𝘯𝘦𝘦𝘥 𝘵𝘰 𝘳𝘢𝘪𝘴𝘦 because they are either profitable or have reserves.

Historically, getting off the venture hamster wheel is tough. You either keep growing rapidly (and fundraising) or you fall short. But perhaps the new mantra of raise once or twice then never again is catching hold here?

Shout to the founders as usual navigating the highway in a snowstorm with little visibility 🙏

#cartadata #SeriesA #SeriesB #startups #fundraising #founders