<story><title>Surviving the Series A Crunch</title><url>http://blog.42floors.com/surviving-series-crunch/</url></story><parent_chain><item><author>peterjancelis</author><text>If the founder can get the 90K cost constant and keep the rev growing at 9% per month, there is only a $10K shortage by month 7 (and cash runs out in month 6 only). This can easily be solved with some annual prepayments.&lt;p&gt;Source: &lt;a href=&quot;https://docs.google.com/spreadsheets/d/1RSHx9pwrSKfOlUr2jyqKvaJiF4BgYfO-rvh0btojRkg/edit?usp=sharing&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;docs.google.com&amp;#x2F;spreadsheets&amp;#x2F;d&amp;#x2F;1RSHx9pwrSKfOlUr2jyqK...&lt;/a&gt;</text></item></parent_chain><comment><author>nlh</author><text>Funny - you did exactly the same thing I did while reading the article - our spreadsheets are basically identical :)&lt;p&gt;So here&amp;#x27;s my thoughts -- I think some outside &amp;quot;real world&amp;quot; perspective is needed here.  While 9% M-M growth may seem OK in the VC-fueled hockeystick growth world, in the real world of profitable businesses it&amp;#x27;s spectacular.  Some companies spend years running losses trying to get to profitability, and if that 9% is real (and sustainable), then I can think of only two things going on here:  A)  Either the whole world has gone crazy or B) More likely - there&amp;#x27;s missing information here.&lt;p&gt;As peter points out -- at a 9% growth rate the business turns profitable after 6 months and on the 13th month is net profitable.  Any rational investor would be frothing to get involved in that sort of business - it becomes a money-printing machine in short order.&lt;p&gt;So I&amp;#x27;m assuming that there&amp;#x27;s missing information here -- either the 9% monthly growth isn&amp;#x27;t sustainable (then it&amp;#x27;s not a true 9% M-M growth rate) or the costs must rise substantially to sustain it.  And if that&amp;#x27;s the case, then you can start to see the real reason VCs might be hesitating.&lt;p&gt;So I guess my point is:  Don&amp;#x27;t obsess over the raw growth number as the sole problem.  That sets the wrong target.  In the end, profits drive businesses, and massively profitable businesses can go public (and get great valuations), and public companies make VCs happy.</text></comment>
<story><title>Surviving the Series A Crunch</title><url>http://blog.42floors.com/surviving-series-crunch/</url></story><parent_chain><item><author>peterjancelis</author><text>If the founder can get the 90K cost constant and keep the rev growing at 9% per month, there is only a $10K shortage by month 7 (and cash runs out in month 6 only). This can easily be solved with some annual prepayments.&lt;p&gt;Source: &lt;a href=&quot;https://docs.google.com/spreadsheets/d/1RSHx9pwrSKfOlUr2jyqKvaJiF4BgYfO-rvh0btojRkg/edit?usp=sharing&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;docs.google.com&amp;#x2F;spreadsheets&amp;#x2F;d&amp;#x2F;1RSHx9pwrSKfOlUr2jyqK...&lt;/a&gt;</text></item></parent_chain><comment><author>limejuice</author><text>Yea, I was running the numbers in my head as I read the article, and thinking this company is not in that bad a predicament.  They look to be very close to turning the corner.  Without knowing more about the business, it&amp;#x27;s hard to say if 9% month&amp;#x2F;month growth is bad or not.  Some of these Saas business start out slow and then they take off once they get some critical mass.</text></comment>