In this comprehensive guide on early-stage fundraising for enterprise software startups, co-founder of Unusual Ventures, John Vrionis, provides valuable insights for founders. The guide is divided into three phases: the Idea Phase, Seed Phase, and Series A Phase. During the Idea Phase, founders focus on essential milestones such as recruiting a co-founder, developing a detailed product description, and validating the market pain by engaging with potential customers. The goal is to confirm the “founding insight” and assess the viability of the business idea for venture capital.

Moving into the Seed Phase, the primary objective is to find and demonstrate product-market fit. This involves hiring a core team, delivering the first version of the product, and gaining traction with at least 10 customers and $1 million in Annual Recurring Revenue (ARR). The guide emphasizes the importance of repeatability and flexibility in the early go-to-market strategy. In the Series A Phase, startups scale their go-to-market efforts to accelerate revenue based on the demonstrated product-market fit. This includes expanding the sales and marketing team, building version 2.0 of the product based on market feedback, and reaching 50 customers with approximately $10 million in ARR.

The guide also highlights the step-function nature of startup valuations, which increase significantly during financing events. Valuations are closely tied to achieving critical milestones and reducing perceived risk. Understanding this nature helps founders set clear goals at each stage and emphasizes the importance of achieving milestones to de-risk the business and raise more capital.