VC’s scaling bias, ARR instability, and the Series A squeeze
A few data points this week that are worth sitting with if you are building or raising right now.
The VC scaling trap
Aswath Damodaran published a long piece on the core tension baked into US venture capital: the model structurally favors rapid revenue growth over profitability. Founders who take VC money face a real binary: build a smaller, profitable business on your own terms, or pursue scale, give up control, and delay profit. Market dynamics, industry structure, and access to capital all shape how that plays out. Google is one outcome. WeWork is another.
Enterprise ARR is less stable than it looks
New research based on a survey of 150 enterprise IT professionals found that 74% plan to expand AI budgets over the next 12 months, with the remainder holding steady. The catch: fewer than half of their AI pilots ever reach full production. And even when a product does get rolled out, long-term commitment is not guaranteed. Enterprise ARR, the piece argues, is less secure than ever, even after a startup clears the pilot stage.
The Series A is getting harder and bigger
Median Series A round sizes have quadrupled over the last decade. That growth has pushed many funds out of the stage entirely, redirecting them toward pre-seed and seed. Fewer Series A investors means less liquidity and higher narrative expectations. The bar now is extreme growth or an ambitious story. Small funds are adapting by concentrating bets and focusing on earlier entry points.
$4M ARR in 12 months, solo, at 30
A founder took GojiberryAI from zero to roughly $3.5M ARR in one year and got into YC. His framework: sell before you build (first $10K came before a single line of code), be painfully specific about the customer (founders at 20-person SaaS companies about to hire their first sales rep), target only people showing intent, and use one channel at a time. He reports 25-40% reply rates against an industry norm of 1-2%. Pricing: $99 per month.
Distribution beats product, 95% of the time
One seed fund estimates that about 5% of its early-stage portfolio has a demand problem. The other 95% have a customer-acquisition problem. That ratio is worth keeping in mind before your next sprint on product.
I’m founder of BizStack at Cagri Sarigoz LLC and a passionate advocate for entrepreneurs.
With over 14 years in tech, marketing, and AI, including my role as Head of SEO at CitizenShipper and co-founder of TaleBot at Intale AI, I’m dedicated to sharing genuine, useful product insights and tips.
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