Investors focused on financial efficiency

Kruze Consulting has found through a survey that investors have begun to pay more attention to revenue performance.

Startups that received Series A funding in 2023 showed four times more revenue growth than those that failed.

Investors want to see Series A startups that are not only growing rapidly, but are also efficient in terms of capital utilization. While revenue growth is important, investors believe that gross profit margin is much more important, as several seed startups with impressive revenues have failed to raise funding in Series A rounds.

Around 90% of seed-stage startups that raised subsequent Series A rounds had gross margins of more than 50%. On average, the most successful companies that passed Series A had gross margins of 80%.

Startups that successfully raised Series A rounds had an average loss ratio of 3 times. Startups that failed had a 10x multiple.