Four Lessons On Successfully Navigating The Growth-Stage Chasm

Forbes

7 days ago

Victor Orlovski is founder of R136 Ventures, a Silicon Valley-based VC firm focused on scaling mid- and late-stage B2B and fintech startups.
Many promising startups hit a wall after their Series A. They had product-market fit, strong early traction, excited investors. Then something broke between validation and scale.
This is the growth-stage chasm: the gap between proving your product works and building a machine that prints money predictably. Only 16% of seed companies reach Series B, and just 7% make it to Series C.
I've seen this transition with a variety of companies, and I've found that in most cases, the difference between those that thrive and those that die isn't luck: It's execution across critical areas that many founders get wrong. Here are four lessons we can learn from organizations that have successfully crossed the chasm.
Lesson 1: From Hero Sales To Repeatable Systems
Research shows that "only 4% of SaaS companies reach $1 million in revenue, and only 0.4% make it to $10 million." This "Valley of Death" between early traction and sustainable scale kills many promising startups, often because they can't systematize what made them successful in the first place.
When Transcend raised their $20 million Series B, investors weren't just buying into their technology—they were investing in a company that had moved beyond founder magic. Transcend's story shows why process maturity matters: The company spun out from another business, but the underlying tool was already 10 years old. They had time to build repeatable systems before scaling. They separated themselves by building systematic approaches to different customer segments, such as creating value propositions for asset owners, EPCs and technology OEMs—each with different benefits and use cases for the same core infrastructure design tool.
This level of process documentation wasn't accidental. Transcend built design automation for infrastructure, but they applied that same systematic thinking to their own operations. Every demo was tailored but followed the same underlying framework.
The Lesson: The transition from hero to system isn't glamorous, but it can be the difference between hitting your numbers by accident and hitting them on purpose.
Lesson 2: Plan For Tomorrow's Problems, Not Today's
Most companies seek to solve their current pain points. However, I have found that many of the smartest ones look for solutions to problems they'll face in six months.
Uber understood this well. While operating in just Paris, Toronto and seven U.S. cities, Travis Kalanick planned to expand to more cities every month. When they raised their Series B, it wasn't just about scaling current operations; it was about building the infrastructure for international expansion.
What struck me about Uber's approach was their strategic focus on tech and global scalability during their early growth phases. Uber made significant investments in technology infrastructure, allowing them to not only optimize operations in existing markets but also build systems that could handle the complexities of international expansion. As documented in Uber's expansion playbook (subscription required), their international launch strategy required sophisticated technical infrastructure to support rapid global scaling. Loic Amado, who was responsible for launching Uber across Europe, the Middle East and Africa, described how each new market required product configuration for local currencies, languages and regulatory adaptations.
The Lesson: Plan for the company you're becoming, not the one you currently are.
Lesson 3: Transforming Unit Economics Through Smart Product Expansion
I believe growth-stage companies shouldn't just acquire customers; they should expand their product value per user. Take Slack: What started as a freemium messaging tool became a $1.12 billion business, thanks in large part to their product expansion strategy. They started with offering free basic messaging, then layered premium features that fundamentally changed the value equation: unlimited message history, advanced integrations, AI-powered tools and more.
The transformation was surgical. Free users hit natural friction points and restricted integrations that made upgrading feel inevitable, not forced. Slack's freemium model drove rapid adoption, and then the premium features converted users at scale. They didn't need massive sales teams—the product expansion did the selling.
The Lesson: Focus on offering features that unlock exponentially more value, not just on acquiring new customers.
Lesson 4: Using Data To Predict Capital Needs
Many companies raise money when they're running out. Instead, I recommend predicting your requirements months ahead.
Weka demonstrated this during their Series D round in November 2022. While the market was contracting, they raised $135 million at a $750 million valuation, doubling their previous valuation. What separated Weka was their ability to present investors with compelling performance data: 255% net dollar retention with zero churn, 635% growth in total contract value and 232% annualized run rate growth. These metrics told a story about predictable growth patterns and capital efficiency that investors could model forward.
Companies with strong unit economics can model their capital needs with precision. When you understand your monthly burn rate, customer lifetime value trends, churn prediction models and expansion revenue ratios, you can predict exactly when you'll need more runway, and these fundraising tools can demonstrate capital efficiency to investors. This isn't just about having good numbers; it's about using them to plan capital raises before you're desperate.
The Lesson: Raise money based on data-driven forecasts, not cash flow panic. Predictable metrics help create predictable fundraising outcomes.
Wrapping Up
A key part of surpassing the growth-stage chasm is having execution discipline when the stakes are highest. These four lessons are battle-tested strategies from companies that successfully navigated the treacherous transition from early validation to sustainable growth. They show the importance of building repeatable systems, hiring for tomorrow's challenges, expanding existing customers and using data to predict your needs before desperation sets in.
The growth-stage chasm claims many startups. But for those with the discipline to execute these fundamentals, it can become a competitive moat. The question isn't whether you'll face the chasm; it's whether you'll be prepared when you do.
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