You hit $10M ARR. You raised the Series B. You did exactly what the pitch deck promised: you doubled the team. You hired a VP of Sales, a Head of Product, and thirty individual contributors.
So why has growth slowed down?
This is the Series B Danger Zone. It is the specific phase where the "Hero Heroics" that got you to Series A become the primary liability preventing you from reaching Series C. At $5M ARR, a founder can willpower their way through a bottleneck. At $15M ARR, willpower is not a strategy; it is a single point of failure.
The symptoms are visible in the P&L, even if they aren't explicitly labeled:
The market data on this is unforgiving. Statistics indicate that nearly 35% of startups fail between Series A and Series B, but the failure to reach Series C is often an operational failure, not a product one. The product works; the machine building it is broken.
When Private Equity firms or Series C investors look at your business, they are not just buying revenue; they are buying a system. If that system relies on you answering Slack messages at 11 PM to unblock a deployment, they discount the asset.
This is formally known as the Key Person Discount. Valuation experts and appraisers often apply a discount of 15-20% (and sometimes up to 50%) to companies where critical operational knowledge is concentrated in a few individuals. If you are looking for a $100M valuation, "Founder Dependency" just cost you $20M.
How do you know if you are in the danger zone? Look at your Revenue Per Employee. For a healthy Series B/C SaaS company ($10M-$50M ARR), the benchmark target is $200,000 to $250,000 per employee. If you have dropped below $150k while scaling, you are not building a software company; you are building a low-margin service bureau disguised as SaaS.
This efficiency gap is almost always caused by a lack of Process Documentation. Without clear Standard Operating Procedures (SOPs), every new hire subtracts value before they add it. They require expensive hand-holding from your most expensive people (you). Research from McKinsey supports this, showing that organizations with clearly defined SOPs outperform competitors by 31%.
You are likely trading "flexibility" for "chaos." In the early days, documentation felt like bureaucracy. Now, the absence of it is an anchor. You need to shift your mindset: Processes are not paperwork; they are business assets.
Escaping the Series B Danger Zone requires a deliberate shift from "Tribal Knowledge" to "Turnkey Systems." This does not mean writing 300-page manuals nobody reads. It means building a system of record for how value is created.
Identify the 20% of decisions that consume 80% of your time. Is it pricing approval? custom integration scoping? hiring final rounds? These are the bottlenecks. You must extract the logic from your head and codify it into a decision matrix or a Loom video. If you can't explain the logic, you aren't operating; you're guessing.
Ambiguity is the enemy of scale. Your sales team needs a precise definition of a qualified lead. Your engineering team needs a precise definition of "ready for QA." Operational readiness metrics stop the cross-functional bickering that paralyzes growth stages.
Stop treating documentation as "extra work." It is the work. In a scaling organization, if a process isn't documented, it doesn't exist. Tie promotion to the creation of assets. A Director doesn't just hit the number; a Director builds the playbook that allows others to hit the number.
The transition from Series B to C is the transition from a "Founder-Led" company to a "Process-Led" company. The former is exciting but unscalable. The latter is predictable, valuable, and—crucially—investable. You have proven you can be a hero. Now prove you can be an architect.
