Securing Series A funding has become an increasingly formidable challenge in the current venture capital climate. As technological advancements, particularly in artificial intelligence, rapidly reshape industries, the bar for early-stage companies seeking significant investment has been raised considerably. This shift necessitates a refined approach, compelling founders to demonstrate not only innovative potential but also robust business fundamentals and clear pathways to scalability and defensibility. At a recent TechCrunch Disrupt event, a panel of seasoned investors—Thomas Green of Insight Partners, Katie Stanton of Moxxie Ventures, and Sangeen Zeb of GV—offered critical insights into what it takes for startups to navigate this demanding environment and attract capital in the coming year.

The Shifting Sands of Venture Capital

Series A funding typically represents the first substantial round of institutional investment a startup receives after its initial seed capital. It’s a pivotal moment, intended to scale operations, expand market reach, and further develop product offerings. Historically, venture capital cycles have been characterized by periods of exuberance followed by contraction. The dot-com bust of the early 2000s, the 2008 financial crisis, and more recently, the post-pandemic boom of 2020-2021, all illustrate these cyclical trends. During the peak of the recent boom, fueled by low interest rates and abundant liquidity, investors often prioritized rapid growth over profitability, sometimes even funding nascent ideas with less proven traction.

However, the landscape has significantly transformed since late 2021 and throughout 2022-2023. Rising interest rates, persistent inflation, and broader economic uncertainties have prompted a widespread recalibration of risk appetite among investors. This macroeconomic shift has rippled through the venture capital ecosystem, leading to a more cautious and discerning approach. As Thomas Green highlighted, citing recent market studies, while the total number of funding rounds has decreased, the average deal size for those companies that do secure investment has actually grown. This indicates a flight to quality: investors are concentrating larger sums of capital into fewer, more promising ventures that exhibit strong fundamentals and a clear path to generating significant returns. The days of speculative "growth at all costs" funding have largely given way to a renewed emphasis on sustainable business models and efficient capital deployment.

Defining Product-Market Fit in a Discerning Market

A foundational principle reiterated by the panel was the paramount importance of achieving undeniable product-market fit (PMF). This concept, often cited but sometimes misunderstood, refers to the degree to which a product satisfies strong market demand. For Sangeen Zeb, GV employs a stringent framework to assess this. His firm meticulously analyzes demand patterns, seeking irrefutable evidence that a startup’s performance consistently improves quarter-over-quarter. "That sequence should be happening consistently," Zeb emphasized, indicating that sporadic spikes are insufficient; sustained, predictable growth is the hallmark of true PMF.

Katie Stanton echoed this sentiment, challenging founders to prove their capabilities repeatedly. "Can you prove that you can repeatedly sell? Can you prove that you can repeatedly grow in a big and growing market?" she asked. This isn’t merely about acquiring customers; it’s about demonstrating a scalable, repeatable sales process and an expanding customer base within a market large enough to support a venture-scale business. Investors are no longer satisfied with anecdotal evidence or projections; they demand empirical data, clear unit economics, manageable customer acquisition costs (CAC), high customer lifetime value (LTV), and low churn rates. The ability to articulate these metrics and demonstrate their positive trajectory is crucial. Startups must show that they are not just finding customers, but are truly resonating with a market segment that values their offering deeply enough to drive consistent revenue and engagement. This focus on validated demand reflects a broader market trend where capital efficiency and demonstrable traction are prioritized over speculative potential.

Beyond Growth: The Imperative of Defensibility

In an era where technology democratizes access to tools and resources, making it "easier to start a company than ever before," as Katie Stanton observed, the challenge shifts to building something truly resilient. "It has never been easier to start a company, and it has never been harder to build something that is defensible," she added. Defensibility, in the venture capital lexicon, refers to a company’s ability to maintain competitive advantages and protect its market position against rivals.

This often involves creating significant barriers to entry for competitors. These barriers can manifest in various forms: proprietary technology (e.g., unique algorithms, patents), strong network effects (where the value of a product increases as more users join), exclusive access to data, powerful brand recognition, or deeply embedded customer relationships that create high switching costs. In the context of the AI boom, for instance, a company simply "using AI" is no longer enough; investors are scrutinizing how AI is integrated to create a truly unique and defensible value proposition. Without clear defensibility, a startup risks becoming a commodity, easily replicated or outmaneuvered by larger incumbents or well-funded competitors. Analytical commentary suggests that the focus on defensibility is a natural response to increased market saturation and the rapid pace of technological innovation, forcing companies to think beyond initial product hype towards long-term competitive insulation.

The Founder’s Crucible: Vision, Resilience, and Expertise

Beyond metrics and market dynamics, the human element—specifically, the quality of the founding team—remains a cornerstone of investor evaluation. All three panelists underscored this point. Katie Stanton emphasized her search for "passionate founders who can endure the long journey of building a company." Building a successful startup is not a sprint; it’s a marathon fraught with setbacks, pivots, and immense pressure. Investors seek individuals who possess the tenacity, resilience, and unwavering commitment required to navigate these challenges.

Sangeen Zeb unequivocally stated, "Passion is still the most important thing." This passion, however, must be coupled with tangible capabilities. Stanton looks for founders who embody a potent combination of "industry and technical expertise." This dual proficiency suggests a deep understanding of the problem space, gained through direct experience, alongside the technical prowess to build a differentiated solution. Zeb further refined this, prioritizing "relentless drive," seeking founders who are perpetually questioning how to accelerate their progress relative to competitors. This relentless pursuit of speed and efficiency is crucial in fast-moving markets. Ultimately, investors are betting on the jockey as much as the horse, seeking leaders who can not only articulate a compelling vision but also assemble and inspire a team, adapt to market shifts, and execute flawlessly under pressure. The cultural impact of a strong, resilient founding team permeates the entire organization, shaping its ability to attract talent, withstand adversity, and ultimately succeed.

Navigating the AI Revolution

The omnipresent discussion around artificial intelligence inevitably surfaced during the panel. The AI boom has injected both excitement and complexity into the venture landscape. While many companies are eager to integrate AI, the challenge lies in differentiating amidst a rapidly crowding market. Thomas Green offered reassurance to companies not directly operating in the AI space: "Just because you’re not AI doesn’t mean you don’t have a very attractive asset, intrinsic quality to you." This highlights that fundamental value propositions, strong customer relationships, and defensible business models remain attractive irrespective of their direct AI involvement.

For AI companies, however, the imperative to stand out is even greater. Green advised returning to "first principles" when evaluating AI startups. "We try to understand, if it’s a market with a lot of competition — [including] both incumbents and next-gen competitors and platform players — what is going to be the standout path?" This analytical approach forces founders to articulate not just what their AI does, but why it is uniquely superior, how it solves a critical problem more effectively than existing solutions, and what proprietary data or models underpin its advantage. The market is increasingly wary of "AI washing"—the superficial application of AI buzzwords without genuine innovation. Investors are looking for deep technological moats and a clear understanding of how AI contributes to a sustainable competitive edge, rather than just incremental improvements.

Strategic Funding: When and Why to Pursue Venture Scale

A crucial piece of advice, often overlooked in the allure of large funding rounds, came from Thomas Green regarding the pursuit of venture-scale growth. "It’s not worth even taking this money unless you think it can be a really big business, right?" he posited. He then cautioned, "Most companies should not [pursue] venture scale. They should not take hundreds of millions of dollars." This commentary serves as a vital reality check for founders. Venture capital is not suitable for every successful business. It comes with inherent expectations for exponential growth and ultimately, a significant exit (acquisition or IPO) that delivers a substantial return to investors.

Many profitable, sustainable businesses can thrive without ever seeking venture capital, opting instead for organic growth, bootstrapping, or debt financing. These "lifestyle businesses" or smaller, focused enterprises might generate excellent returns for their founders and employees but do not fit the venture capital model’s demand for outsized returns on high-risk investments. Founders must critically assess whether their business truly has the potential for hyper-growth and market dominance before committing to the venture path. Taking venture capital implies a commitment to a specific trajectory, often involving aggressive expansion and strategic decisions aimed at maximizing investor returns, which may not always align with the founder’s initial vision for a more modest, yet equally successful, enterprise. This strategic choice has significant social and cultural implications, influencing the types of businesses that get celebrated and the pressures placed upon entrepreneurial endeavors.

The Enduring Principles of High-Stakes Investment

Despite the fluctuations in market conditions, the core tenets guiding venture capital investment, particularly at the critical Series A stage, remain remarkably consistent. The panel collectively suggested that while the environment demands more rigor, the fundamental pursuit of innovation with immense potential persists. "The bar is high, but if the outcome can be impossibly huge, we’ll take that [bet]," Thomas Green concluded.

This encapsulates the essence of venture capital: a high-risk, high-reward endeavor. Investors are seeking transformative companies that can disrupt industries, create new markets, and generate returns far exceeding conventional investments. The current market simply requires founders to demonstrate a more complete picture earlier in their journey—proving not just a compelling idea, but also robust execution, clear market validation, a strong team, and a defensible strategy, all against a backdrop of increasing economic scrutiny. For founders embarking on the Series A fundraising journey, understanding these evolving expectations and rigorously preparing to meet them is no longer merely advantageous; it is absolutely essential for success.