Milestone map
Milestone map
3 milestones
Reach $500k+ ARR
Months 1–18 of a 2-year journey (timing varies significantly)
Reach $500,000 annual recurring revenue, a level many buyers consider acquirable. ARR is the annualised value of current recurring contracts, not total revenue. For SaaS, that's about $41,700 MRR. For annual contracts, it's the sum of active contract values. Existing customers must not churn faster than new ones join. Submit churn or retention data alongside ARR.
Proof required
Submit a financial record showing $500,000+ ARR, with the annualised calculation shown. Add a churn or retention figure for the last 6 months. Write 100 words on how ARR was calculated and the main revenue driver.
What gets checked
- ARR is calculated correctly, like 'MRR × 12'. One-time or project revenue isn't ARR.
- Retention data is included honestly. High churn or low net retention signals unsustainable ARR.
- Revenue comes from independent customers. Describe customer count, average contract and industry.
Common mistakes
- Counting marketplace volume or bookings as ARR. Only current recurring contracts count.
- One customer holding over half the ARR. Buyers heavily discount that concentration.
- Inflating ARR with steeply discounted prepaid plans. It deflates at renewal and fails diligence.
Resources
Foundationstart here
Depthgo deeper
Arena
What a verifier looks for
- Verify the calculation: MRR × 12, or summed annual contracts. Ask how one-time revenue was excluded.
- Ask the monthly churn rate and annual renewal rate. High churn undermines the milestone.
- Ask the customer count and the largest customer's share. Above 30% is a standard risk flag.
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Start acquisition conversations
Months 12–24 (after the $500k ARR milestone is reached)
Start real acquisition conversations with at least two potential buyers who've shown written interest. Written interest means they agreed to receive a deck, financials or an intro call. Conference chat, 'let us know if you sell' notes and unanswered outreach don't count. Use an M&A advisor, warm introductions or direct outreach to corporate development teams. Proof is emails showing mutual interest, a signed NDA or a letter of intent.
Proof required
Submit written evidence of conversations with at least two distinct buyers. Emails, signed NDAs or a letter of intent work. Redact terms, but keep party names and expressed interest visible. Write 100 words on the buyer type you approached, strategic or financial, and why.
What gets checked
- Two distinct parties replied in writing wanting to proceed. One buyer plus an unanswered email doesn't count.
- Redaction hides terms, not the fact of the conversation or the buyer's name.
- The note explains why this buyer type suits the business.
Common mistakes
- Treating vague inbound interest as a conversation. A real one involves sharing financials and discussing terms.
- Starting before a defensible ARR level. Early talks often bring lowball offers or stall.
- Going without an M&A advisor on a first exit. Many work on success fees rather than retainers.
Resources
Foundationstart here
Depthgo deeper
Masteryfor the dedicated
What a verifier looks for
- Check the evidence comes from two different organisations. Subsidiaries of one parent may count as one.
- The buyer must have replied. Ask for the response if only sent messages are shown.
- Ask whether an M&A advisor or lawyer is involved. Note it if not.
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Deal closed
104 weeks total — this milestone completes the full 2-year outcome
Complete the acquisition: signed purchase agreement, funds received and transition done. Closing means ownership legally transferred and the agreed consideration changed hands. With an earnout, the milestone is met at signing, not at the earnout's end.
Proof required
Submit the signed purchase agreement. Keep the parties, what was transferred and the closing date visible. Financial terms may be redacted. Write a 200+ word reflection. Cover deal structure and what drove the valuation. Say what you'd change and what advice you'd give a founder starting now.
What gets checked
- A signed final agreement with a passed closing date. A letter of intent or term sheet isn't closing.
- Redaction hides terms, not the fact that the deal closed.
- Each of the four reflection prompts gets at least two substantive sentences.
Common mistakes
- Treating a term sheet as a close. Diligence follows, and deals can still fall through.
- Abandoning transition obligations. That can put deferred payments and earnouts at risk.
- Writing the reflection years later. Write it within 6 months while details are fresh.
Resources
Foundationstart here
Depthgo deeper
Masteryfor the dedicated
What a verifier looks for
- Check parties, what was transferred and the closing date are visible. If not, ask for re-redaction.
- Check all four prompts are answered specifically, not in one generic sentence each.
- Ask one follow-up, like the ARR multiple and how it was benchmarked.
You'll sign in first, then come straight back here.