If you’re a founder at the Seed Stage of the company-building journey, there’s a good chance you’re intimately familiar with the expression above. It represents the first of many sales milestones for a typical enterprise startup and is a critical metric to hit in order to raise subsequent financing in the form of a Series A. Reaching this goal from a customer acquisition standpoint also typically indicates that you’ve achieved, or are very close to achieving, product-market fit.
In a time where startups are raising record-setting levels of capital and making/losing eye-watering amounts of money, one would think that getting to that first $1 million in revenue, while not easy, would still be very attainable.
Most startups never reach it and when others finally do, many are left sputtering between extension rounds or crossing the Series A mark with lasting damage.
If you drill down to analyze the overall conversion rates here, which take into account all milestones (sales, product, team, etc.), it’s made clear that the jump from Seed to Series A is by far the hardest to make with 79.4% of companies failing to do so.
This “death gap” between Seed and Series A is also exacerbated by the fact that 82% of companies that raised Series A rounds from top investors in 2019 are already making money from their customers. That’s a big shift from 2010 when just 15% of Seed-Stage companies that raised Series A rounds were already making some money, and as recently as 2016, when just 56% of the startups nabbing Series A funding were generating revenue.
You may be familiar with the idea of sales enablement, but for those new to the topic, sales enablement can be defined as breaking down the complexity of sales into practical ideas through scalable and repeatable practices that will lead to increased revenue. In simplest terms, it’s the systematic process of teaching others how to sell effectively.
The same way there are defined steps and processes for the software development lifecycle, a good sales process has the same level of rigor for delivering the highest quality revenue (CLV) at the lowest cost (CAC) in the shortest time (ASC). Sales enablement programs provide this process to sales reps, regardless of whether they’re in their first year or their 10th, in order to learn a company’s sales methodologies through training, templates, frameworks, playbooks, email sequences, etc.
For companies that have sales enablement programs, the results are impressive. According to Sales Hacker:
If you’re still not convinced, according to a Pitchbook report, Lyft, Zoom, Slack, Uber, PagerDuty, Fastly, Crowdstrike, and over 84% of tech IPOs over the last two years have sales enablement programs.
Here’s my take on why that’s the case:
1. The seemingly endless amount of sales tips, tactics, books, YouTube videos, podcasts, etc., are not for first-time founders. Instead, this content is created for career salespeople and companies that already have product-market fit and are now scaling revenues for their next $1M, $10M, $100M, $1B+.
2. Sales enablement programs require a significant investment of time, people, and money (roughly a $200K starting point on the low end). Only companies that have hit significant revenue milestones and have medium/large sales teams can afford to build one internally or hire expensive consultants.
That’s why we created the sales arm of Unusual's Founder Services. Our program is designed to take all of the insights, strategies, playbooks, and tactics from world-class sales and sales enablement programs and distill them down for what’s most applicable and most impactful for seed-stage founders and their goals.
By better-enabling founders around sales go to market strategies at the beginning of their journey, when they need it the most, I believe we will allow more companies to survive the seed-to-series-a death gap and become more well-rounded and effective executives in the process.
If you tasked the majority of first-time sellers with the goal of bringing in $1M of revenue with no training, no leads, no sales management, no product recognition…oh, and you have to do it in 18–24 months or you’ll likely lose their job, few would sign up for that.
Yet, this is exactly what’s being asked of first-time founders.
By creating what I consider a founder sales enablement program, I’m excited to take what’s made other software companies and sellers wildly successful and give it to founders who are just getting started.
Picking a GTM motion