What founders should think of when they have a series C | Being looking for a Series C | Techcrunch

According to Sapphire Ventures Partner Cathy Gao, StartUp -Urders are confronted with a confusing and even conflicting capital market in 2025. “Capital is not scarce. But access to that capital is more difficult than ever,” she said.

GAO, who spoke to Techcrunch’s All Stage conference in July, said it is possible for StartUp founders, especially those in later series C phase, to navigate in this specific economic environment. And they have to start with a reality check.

To begin with, she said, it is important to note that only one in five startups that a Serie A ever yields to raise a series C. And in the past year the bar for raising the capital has only risen; Investors no longer only hunt for strength, because many were in recent years – they are chasing securitySaid Gao.

“Investors now ask:” Is this company really a winner in every market they serve? “Said Gao. “The question is really not:” This company is growing? ” The question has been shifted: “Is this company on a process where the benefit really cannot be denied?” “

Companies that increase series C rounds must meet certain criteria. First, they are all category leaders, according to GAO.

“They define their categories. They have a clear go-to-market and unmistakable attraction,” she said. “In short, they grow efficiently, but there is also traction to show that this is really the market leaders in the spaces in which they work.”

Companies that want to increase a series C must also remember that statistics are not always the same as money. Of course, statistics are important, just like annual returns, growth and retention, she said, but if investors are not sold on the idea that a company can really become a leader in their respective space, they continue.

“Investors have to explain why a company will win in the future,” she continued. For example, there are companies that do not have great statistics, but somehow raise a suitable series C round. In one case, a startup raised more than a rating of $ 2 billion, she noticed. “In fact, they were able to communicate the story to investors why this company will be a leading company over time,” said Gao about the successful increase of the company.

Another GAO rule: continuity is better than short-term virility.

In the AI era, companies grow faster than investors ever seen before, she noticed. “But often it is the case, which goes up, also comes down sharply,” said Gao. “So the question is:” Is this growth sustainable? ”

In a series of C, investors are looking for ‘composite loops’, or seeing that the company becomes stronger as it scales, she said.

‘Does your product become better for every new customer you sign? Is your CAC [customer acquisition cost] Reduce or increase for every new user you take on board? “She asked.

If the answer is yes, investors will ‘lean’, said Gao; If the answer is ‘no’, investors are most likely ‘running away’, even if the statistics of a company look very strong.

Finally, she said, Founders must treat fundraising as a go-to-market campaign and try to develop relationships with VCs before they pitch them for capital. Gao called her company as an example. Sapphire likes to invest in a company at series B level, but they usually know the company for a year or more.

“That means in the Serie A, although we are not actively leaning to educate, we try to build a relationship with a company and with the founder,” she said. “We get information and we are developing a longitudinal picture of how this company is advanced.”

She said that founders should start building a “lightweight investor CRM” or a database that manage the relationships with investors.

Investors take notes while meeting founders, and founders have to do the same, she said. Founders must write down the names of partners, in which they like to invest and in which companies they have recently supported. Make a distribution list and send periodic updates to the investors, she said. “This is an easy way to keep inventors informed.”

Perhaps the most important thing is that Gao, however, it was noted that a company that wants to increase a series C should not take into account fundraising until they have received a signal from several companies that they are interested in supporting the round.

“The last thing you want to do is the market incorrect time,” she said. After all, Timing is everything at series C level. “It’s not about happiness, throwing a 50 and hoping it says yes,” she went on. “It’s really about timing and planning ahead.”