The series B that never was
In Q3 2019, we were on pace to grow from $4M ARR to $8M ARR.
It was one of the most exciting times in the company history.
We had expanded past our wedge of "list growth for ecommerce" into "email marketing for commerce", and the customer base and revenues were growing like crazy.
Everyone around me was pushing for a big series B.
"Go raise $20M"
"Ask for a big number so they know we're serious"
That was the strategic conversation around the table. Raising the next round is just...what you do when you're on the VC path.
But the business, though growing 2x each year, honestly didn't need much capital, if the plan was to just keep growing.
This was one of those moments where I wish I pushed harder for what I wanted, despite the risks.
We had raised $5m at this point, and were approaching $8M ARR. Incredibly cash efficient. Something I was proud of.
Why did we need to raise the next round? Ego? Paper gains for the VCs? Just because the metrics "supported it"?
I'll get into the fundraise for series B in a sec, but I think it's important context to understand why I agreed to spend all my time for 4 months attempting to raise a series B.
Being a founder, growing at real scale, is a whirlwind. So many random thoughts will race through your head.
A few examples I remember thinking in 2019:
When you're growing quickly, your existing VCs really do want you to become their next great portfolio company and "return the fund". They want you to go for it when they see the growth and potential. That's fine - it's their business model and you need to respect and understand that if you take capital. There is pressure here, even if subtle.
So then it's like, "if I tell the board to fuck off and don't raise the series B, will they fire me? Probably not, but if over the years you show too many signs that you're tired, or that you're ok with a $50M or $100M sale when your growth could take you to $1B, will they think it's time for a new CEO?
"Well damn, when does new CEO ever really work in an early, scaling company. That would kill my baby and every ounce of equity I built up. I'd rather just do it myself".
All were real thoughts I had in fall of 2019. So I said fuck it, might as well explore if we could raise a series B. Maybe I could negotiate some big retention bonuses for key team members or secondary if the round was good enough. That would feel good for everyone.
Also, "well we could build a 3rd product to cross sell pretty easily if we had more devs".
"I don't even have any acquisition offers, so what other path do I have?"
And just like that I convinced myself this was the right thing for the business.
Prepping for series B
You can kind of cobble together a pre-seed, a seed round. Even a series A if the business has enough brute force momentum. We did. That's how I raised our earlier rounds (pitch decks and metrics for those are here).
Not a series B, though.
Series B is intense. You need a really big narrative. You need a rock solid team. You need serious revenue growth, at real scale. And you need data sets around retention that are bulletproof.
So I put that stuff together.
It's all below for subscribers only. 👇👇👇