Navigating the Funding Landscape in Today’s Climate: A Founder’s Perspective

Fundraising has been a challenge ever since 2022, but it is still possible.  Mariana Hagström from the legaltech startup Avokaado shares key learnings from their recent fundraising and puts them into a 2024 perspective.

This article was written by Mariana Hagström, founder and CEO at Avokaado.

Fundraising in 2024 – oh yes, it's a challenge we've already experienced since 2022. So what's changed? Everything. Growth at any cost is dead. Say hello to revenue and sustainable growth. The golden age of SaaS and subscriptions is gone. Welcome revenue from services. SMEs are churning; let's focus on Enterprises. The VC market is falling; welcome M&A and private equity. 

But fundraising is still possible. Valuations, expectations, and timelines are just different. In the golden days of VC-backed growth, startups had to lock in just two key metrics to secure funding: TAM and revenue growth: show me your X-s, the bigger, the better. However, the early 2022 downturn brought another priority to the forefront: sustainable growth. In 2024, B2B SaaS needs to grow at least 2-3X a year, preferably 3X (ok, the burn rate is also considered), A-round readiness comes now at ARR €1.5–2M, and, of course, a long-term AI strategy needs to be in place. Let's delve into the main learnings from Avokaado fundraising and put them into a 2024 perspective.

Sustainable growth – new metric on da block

Yay, it's a tricky one. Before 2022, the norm was growth at any cost. If you weren't burning money in a market with low interest rates, you were deemed a loser, not playing the GAME. The go-to-market strategy looked like this: let's grab as much market share as possible, as fast as possible. Money? No problem. Now, with funds becoming a limited resource, we're shifting our focus to new metrics. Primarily, ARR per employee and the mystical Rule of 40 (R40).

ARR per employee serves as an efficiency indicator for the startup, revealing the impact of each team member. In this realm, the role of AI and automation is pivotal in gauging how scalable the company can be. The Rule of 40 is a guiding principle asserting that a software company's combined revenue growth rate and profit margin should equal or exceed 40%. SaaS companies surpassing the 40% mark are generating profit at a sustainable rate.

In our fundraising journey, only after adopting a strategy centered on sustainable growth, we secured funding – a good one. We prioritized revenue and efficiency, only later delving into the math of X-s. However, for those in the pre-seed or seed stage, keep in mind that Monthly Recurring Revenue (MRR) might not be the best and only key performance indicator (KPI). Concentrate on other proof metrics showcasing your product-market fit and user engagement.

We have all the time in the world

This line echoes the lyrics of a Depeche Mode song, casting a somewhat "Depres Mode" now. So here you are in the challenging fundraising game, hoping to close fast. Like all startup founders, you hold onto your belief in miracles, (otherwise, you wouldn't be a startup founder, right?) even though every other day may prompt considerations of imposter syndrome therapy. Yet, the game is on, and investors ask about results each month. It's a balancing act of over-performing or under-delivering. Even if you played it less ambitiously (yes, considering your burn rate, headcount, and limited resources, this is ok!), it's wiser to overdeliver and demonstrate your ability to execute your plan.

Then comes the paramount challenge of fundraising in 2023, which persists into 2024 – no VC wants to lead. This necessitates engaging with more investors, gearing up for a marathon rather than a sprint, building relationships, proving your case, and sustaining your company longer than initially planned.

So, start raising when you're not desperate for it. This approach allows you to negotiate from a position of strength and ensures you can stick to your vision without making hasty decisions.

Once you've secured your lead investor, you've essentially gained a partner for a lifetime (your startup, I mean). So, it is all worth it. It’s best for the partner to be experienced, so if you can, choose wisely. A seasoned partner won’t only bring financial support but also valuable insights, guidance, and a network that can significantly benefit your startup's growth trajectory.


Our fundraising journey began in 2022, just before the Russian invasion of Ukraine. The market fell silent and slowed down. We pivoted our strategy toward sustainability, downsized our plans (though still ambitious), reduced our valuation by 2X, and only then did our deal gain momentum. The total round time spanned 1.5 years, with a closing date set for July 1, 2023, just one year later than initially planned! We managed to secure the best investors on board, Tera VC and Andrus Oks, and successfully brought everyone onto the same page. Our investors deeply understand our business, the opportunity, our team, and the competitive landscape.

So, prepare for the long term, be accountable for your numbers, and prioritize over-delivering rather than underperforming. Opt for less money but use it wisely, leveraging more AI and automation (aim for more ARR per employee, as discussed in the previous chapter). Remember to build relationships beyond finances. Establishing strong connections with investors and stakeholders goes beyond financial support; it lays the foundation for trust, collaboration, and long-term success. This holistic approach to your startup journey ensures that you not only secure the necessary resources but also foster a network of support that can prove invaluable in navigating the challenges ahead.

Is there a life beyond fundraising?

Honestly, not much. There isn't much life even in the everyday routine of a founder. You're all in. Every book you read, every event you participate in, and every lunch you eat – they all seem to revolve around the startup journey. But do take a break. It is not only possible but should be actively pursued. As mentioned, a startup is a long journey, and success often happens overnight, mostly after 7-8 years. Prioritize your family, health, good food, engage in regular exercise, and keep in touch with friends. This pays off in ways beyond the immediate demands of your startup endeavors. Don't forget that a well-balanced life contributes not only to personal well-being but can also enhance your professional performance, creativity, and productivity.

Mariana Hagström will talk about setting up data-driven operations from Day 1 for startups, ensuring scalability, control, and investment readiness on January 25 at 13.00 in Seminar Room 6 and about legal due diligence when raising angel or seed round with Valter Võhma from TRINITI on January 26 at 13.00 in Seminar Room 4.
See the full festival schedule.

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