Product-market fit and fundraising

Fred Wilson, quoted in A Dozen Things I’ve Learned from Fred Wilson by Tren Griffen:

Getting product right means finding product market fit. It does not mean launching the product. It means getting to the point where the market accepts your product and wants more of it. The first step you need to climb is building a product, getting it into the market, and finding product market fit. I think that’s what seed financing should be used for.

The second step you need to climb is to hire a small team that can help you operate and grow the business you have now birthed by virtue of finding product market fit. That is what Series A money is for.

The third step you need to climb is to scale that team and ramp revenues and take the market. That is what Series B money is for.

The fourth step you need to climb is to get to profitability so that your cash flow after all expenses can sustain and grow the business. That is what Series C is for.

The fifth step is generating liquidity for you, your team, and your investors. That is what the IPO or the Secondary is for.

Notes:
(1) Is achieving product-market fit limited to the seed stage? Not if you view product-market as a continuum, as something you’re always trying to improve.
(2) My personal view: while there’s a minimum level of product-market fit you need before you can scale, it doesn’t end there, particularly if product-market fit is defined more expansively.
(3) Fred’s description of company stage at each funding round is very different from Rob Go’s. See The real difference between funding rounds.
(4) Tren Griffen’s blog is terrific.

2 thoughts on “Product-market fit and fundraising

  1. Hi,

    Just two quick things:

    1) these emails are great, please keep them up (particularly how the lessons you learn are applied to seeking alpha).

    2) Who is tren griffin and why/how is he so well respected in the blogosphere?

    Thanks,

  2. Pingback: If you have low retention, don’t scale and keep your costs low | A Founder's Notebook

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