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Economy

European Venture Markets: Seed-to-Series A Conversion in Berlin

Avatar photoGeorge Power
Berlin, in Germany: What drives seed-to-Series A conversion in European venture markets

Berlin stands out as one of Europe’s most dynamic startup centers, blending comparatively affordable living costs, substantial talent reserves, a diverse community of international founders, and a tightly connected web of early-stage investors and operators. This mix turns the city into a natural testing ground for identifying the factors that shape the jump from seed to Series A across the continent. This article brings together market context, essential growth drivers, Berlin-oriented dynamics, illustrative examples, important metrics, and actionable guidance for founders and investors looking to strengthen their chances of advancing from seed financing to a solid Series A round.

Why the transition from seed funding to a Series A round matters

Seed-to-Series A conversion refers to the share of seed-backed startups that manage to secure an institutional Series A (or an equivalent growth round) within a specified timeframe, typically 18–36 months. This metric is widely viewed as a vital gauge of ecosystem strength, since the Series A stage often marks the moment when teams intensify product development, expand go-to-market efforts, and accelerate hiring to position themselves as category leaders. Strong conversion levels reflect effective capital deployment, robust talent movement, and solid investor trust in continued financing.

European market context: macro trends shaping conversion

– Venture flow: European venture activity accelerated in 2020–2021 before easing in 2022–2023, and capital availability still differs by stage; seed rounds held up comparatively well, whereas mid-stage growth funding tightened and reduced Series A liquidity in certain sectors. – Investor behavior: Institutional investors tended to favor later-stage deals during expansion cycles, yet limited exit routes and normalized interest rates have pushed Series A evaluations to become more stringent. – Cross-border funding: European Series A raises frequently involve international syndicates (UK, Nordic, US), requiring founders to prove that their business can scale beyond domestic markets. – Sector variance: SaaS and B2B typically achieve stronger conversion rates than saturated consumer categories or capital-heavy deep tech unless those deep tech ventures hit decisive technological milestones or secure robust strategic alliances.

Reports from Dealroom, Atomico, and VC databases show that European conversion rates depend heavily on vintage year and sector, but a practical expectation is that a meaningful minority of seed-stage companies reach Series A within 24 months, with higher rates for startups that show strong unit economics and repeatable growth.

Core drivers of seed-to-Series A conversion

  • Revenue traction and unit economics: Strong headline growth metrics (MRR/ARR for SaaS, GMV or recurring orders for marketplaces) along with robust unit economics—LTV/CAC, CAC payback, and gross margins—serve as key benchmarks for Series A investors.
  • Product-market fit and retention: Demonstrable retention strength (cohort analyses, net revenue retention) paired with minimal churn lowers perceived risk and validates increased investment in customer acquisition.
  • Team and founder track record: Founders or teams with prior exits, substantial sector expertise, or complementary capabilities significantly boost investor trust in large‑scale execution.
  • Talent access and hiring velocity: The capacity to secure seasoned engineers, product leaders, and commercial talent in tech hubs such as Berlin accelerates execution and influences valuation trajectories.
  • Capital supply and syndicate quality: Seed investors willing to support follow‑on rounds, combined with access to established Series A venture firms, markedly raise the likelihood of securing a successful round.
  • Strategic partnerships and customer concentration: Early agreements with reputable enterprise clients or channel partners help validate revenue paths and appeal to later‑stage investors.
  • Market size and defensibility: Expansive addressable markets and durable competitive advantages—network effects, exclusive data, or regulated positions—strengthen the case for Series A expansion.
  • Timing and macro environment: Interest rate trends, exit climate, and overall risk tolerance shape both the pace and magnitude of Series A investment across regions.

Why Berlin stands out: distinctive drivers within its ecosystem

  • Concentration of early-stage investors: Berlin brings together notable seed and pre-seed funds (for example, Point Nine, Cherry Ventures, Project A) along with active angel groups that often deliver swift first checks and hands-on guidance.
  • Operator density and talent pool: Major tech companies, unicorns, and seasoned operators continually generate repeat founders and experienced senior talent for scaling ventures.
  • Cost arbitrage across Europe: Its comparatively lower expenses (relative to London or San Francisco at equivalent stages) give teams extended runway to refine products before facing typical Series A pressures.
  • Strong international orientation: Multilingual teams equip startups to expand across EU markets quickly, reinforcing a central Series A narrative prized by many VCs aiming for continental reach.
  • Public-private support: Initiatives such as EXIST, government grants, and city-supported programs (startup hubs, corporate collaboration schemes) can offer non-dilutive funding and early pilot opportunities, proving especially valuable for deep tech and climate-focused companies.

Notable Berlin case studies and key takeaways

  • Zalando and Delivery Hero (historical lens): These early Berlin standouts demonstrate how scaling B2C platform logistics can generate powerful multiplier effects and cement category leadership, while their post-seed growth drew substantial later-stage capital and talent that fueled subsequent founder generations.
  • SoundCloud: This company proved that a platform with strong community momentum can expand worldwide from Berlin, yet it also underscored how sensitive investor confidence can be to monetization timing and the need for persuasive revenue plans.
  • Tier and Gorillas: Rapidly expanding consumer logistics players secured significant follow-on funding after asserting dominance in their local markets, while also revealing the capital-heavy nature of the model and the critical focus on unit economics at the Series A stage.
  • Trade Republic and N26: These fintech leaders illustrate that solid regulatory execution, efficient user acquisition, and unmistakable product–market fit can attract major Series A rounds and beyond, frequently involving international investor groups.
  • Point Nine-backed SaaS startups: Numerous enterprise SaaS ventures in Berlin reached Series A by achieving ARR benchmarks and proving strong gross margins and NRR, following conversion frameworks that consistently benefit enterprise-driven founders.

Key quantitative indicators investors monitor across sectors

  • SaaS/B2B: Rapid ARR growth, strong unit economics, expansion revenue (net revenue retention >100%), a clear sales model (land-and-expand or enterprise deals), and predictable churn.
  • Marketplace and consumer: Demonstrated repeat purchase behavior, improving CAC payback, retention cohorts trending positively, and evidence of defensible supply-side dynamics.
  • Deep tech and climate: Technical milestones de-risking commercialization, strategic partnerships or pilots, clear path to repeatable revenue, and access to grant/EIC-style funding to extend runway.

Practical playbook for founders to increase conversion odds

  • Prioritize unit economics early: Monitor CAC, LTV, payback periods, gross margins, and burn multiples, ensuring that even at the seed stage every dollar invested can be linked to reliable revenue generation.
  • Structure seed investors for follow-on: Choose seed leads capable of syndicating into a Series A or connecting you with strong Series A contenders, while steering clear of isolated angels who cannot support the next raise.
  • Demonstrate repeatability: Consistent GTM channels, dependable sales rhythms, and early team members who can scale operations all provide compelling proof for Series A VCs.
  • Focus on retention and cohorts: Cohort-driven insights reveal growth more accurately than superficial KPIs, helping illustrate enhanced unit economics across cohorts.
  • Build a measurable timeline: Establish clear milestones for the next 12–24 months that make pursuing a Series A feel like a natural progression, whether tied to revenue, customer traction, hiring, or technology benchmarks.
  • Prepare for tougher diligence: Expect Series A investors to scrutinize contracts, unit economics, founder equity structures, and customer references, so organize the necessary documentation well in advance.

VC perspective: how investors evaluate conversion probability

Investors weave together both qualitative and quantitative cues: they evaluate founder skill and determination, feedback from customers, how reliably growth channels can be replicated, overall defensibility, available runway, and the competitive environment. In practice, Series A partners often explore whether a company is positioned to triple or even quintuple its core revenue indicators within 12–24 months after investment, as well as whether the existing leadership team can support that level of expansion. The makeup of the syndicate and the influence of signal investors, including the reputation of the seed lead, significantly shape dealflow momentum.

Sector- and stage-specific caveats

  • SaaS: Faster path to Series A if ARR thresholds and retention metrics are visible, but ARR expectations differ by market—enterprise SaaS can move slower but with larger deals.
  • Consumer: Requires clear differentiation and sustainable LTV/CAC; capital intensity and churn risk slow some consumer startups’ progression to Series A.
  • Deep tech: Scientific or hardware milestones are sometimes necessary before commercial traction; public grants and strategic investors often bridge the gap to Series A.

Policy, ecosystem interventions, and public capital

Berlin benefits from public and semi-public interventions that help seed-stage startups—grant programs, city initiatives, and partnerships with corporates. Non-dilutive funding and public validation reduce early-stage dilution and can increase Series A attractiveness if paired with commercial traction. Matching public instruments with private follow-on capital remains an important lever to improve conversion rates.

Practical metrics founders should share with Series A investors

  • ARR/MRR growth and month-on-month or quarter-on-quarter growth rates
  • Gross margin and contribution margin by product line
  • Customer cohorts, churn, and net revenue retention
  • CAC, LTV, and CAC payback period
  • Burn multiple and runway to constructive milestones
  • Top customer logos, pilot agreements, and referenceable contracts
  • Hiring plan with key hires and costs tied to projected growth

Results and compromises: determining the ideal moment to pursue a Series A

Raising Series A too early can dilute growth or create expectations the team cannot meet; raising too late risks losing momentum or competitive edge. The optimal window balances demonstrable repeatability, strong unit economics, and a credible plan to use capital to accelerate scalable growth. Berlin’s ecosystem allows some flexibility thanks to a large available talent pool and diverse early-stage capital, but founders must still align timing with concrete operational milestones.

Seed-to-Series A conversion in European markets is governed by a mix of macro capital cycles and concrete, company-specific signals: repeatable revenue, sound unit economics, a hire-ready team, and investor syndicates willing to follow. Berlin crystallizes these dynamics because it combines a deep talent supply, a dense early-stage investor base, and supportive public infrastructure. Founders who translate product-market fit into measurable growth and defensible economics, while aligning investors and timing strategically, are most likely to convert seed momentum into a transformative Series A, and the lessons from Berlin scale across Europe when applied with sector sensitivity and rigor.

By George Power