Last week, Harry Stebbings sparked a debate with a simple tweet: a founder growing from $1.5 million ARR to $5 million ARR next year was "not good enough" for a Series A. The reason? The "opportunity cost of cash." For many ambitious builders, that growth trajectory sounds like a dream. But according to two seasoned venture capitalists, it's now a hard truth.
The New Math for Series A
Rory O'Driscoll, a respected VC, confirmed Stebbings' controversial statement. “I think that the state the factual statement you made is correct in the kind of growth rates you're seeing now the bar,” O'Driscoll said. He acknowledged that while deals with lower growth rates aren't impossible, they're not common "in the age of AI." The message is clear: the baseline for what's considered competitive growth for Series A has shifted, especially in sectors tied to rapidly advancing technologies.
The VCs making big bets today aren't looking for solid growth; they're hunting for explosive, outlier trajectories. Stebbings clarified the new benchmark: “If you want to raise money, just understand the facts, which are the deals that people the deals that are getting swept off are going one and a half to 15, right? You're not that.” This means a founder might need to demonstrate ten times growth, not just triple, to truly stand out. It’s a brutal reset for what constitutes a "venture asset" versus a great business.
The Brutal Honesty of Opportunity Cost
Jason Lanin weighed in, praising the candor of Stebbings' initial tweet. "No one's honest," Lanin observed. He contrasted Stebbings' directness with other VCs who, he believes, implicitly mislead founders. These VCs might offer vague encouragement or keep doors open, even when a company's numbers don't stack up. This often wastes a founder's time and energy chasing funding that was never truly within reach. For Lanin, the harsh truth, delivered early, is a kindness.
He also pointed to the internal pressure VCs face. Partners need to secure "lighthouse investments" – the outsized winners that define a fund and guarantee its next. If a partner doesn't land these deals, their own job might be on the line. “Even if they'd be happy to do this deal, they might get fired,” Lanin said, explaining the stakes for VCs trying to make the right calls. This puts immense pressure on VCs to chase the biggest growth outliers, even if it means passing on otherwise healthy businesses.
What to Do With This
Pull your next 12-month growth projection. If you're currently at $1.5 million ARR and projecting $5 million, re-run the numbers to model a $15 million scenario. Identify the single biggest lever – a new market, an aggressive pricing shift, an untapped distribution channel – that could make that extreme growth plausible. If you can't articulate a path, however audacious, to that 10x target, focus on profitability and building a sustainable business that doesn't rely on top-tier VC capital.