(Editor’s note: Phil Fernandez is founder and CEO of Marketo. He submitted this column to VentureBeat.)

Approaching the venture capital community with the hopes of getting funding can be daunting.  However, understanding where you are in the cycle can help prepare you for what to say – and more importantly, what VC’s want to hear to feel confident in their investment.

Having helped build four companies from ground up with two going on to IPO, I have had my fair share of VC engagement and have gleaned a few take-aways that entrepreneurs should focus on when engaging with VCs throughout the early life of a new business.

The round: Series A

VB Transform 2020 Online - July 15-17. Join leading AI executives: Register for the free livestream.

The trick: Show there is interest

Before you focus on anything else, it’s important to first show your experience. In the beginning, investors invest in people, not products or ideas. The VC industry cares about the credibility of the person, and it’s therefore critical to highlight the track record of the founding team.  No track record?  Then network, and surround yourself with a couple of wise and well-known advisors to help you to get through the door.

Your mission during the series A phase of company development is to demonstrate the viability of your idea and prove that someone will pay you money for your product.  In planning for this phase, it is important to understand the reality of VC investing in today’s market. In software, long gone are the days of the big $50 million series A, hiring like crazy and throwing around millions for marketing.

Investors are more skeptical and want to see proof before investing. Therefore entrepreneurs need to be smart and lean in how they build their company. The goal is to keep it small and prove that you can move fast while creating something of substance. The motto for new entrepreneurism is to be capital efficient, light and nimble to create value.

The good news is that most companies really no longer need those large initial investment dollars. The emergence of amazing software development tools, mature open source building blocks and platform as a service delivery models all provide opportunities to innovate products much more quickly and for far less money. At the same time, marketing strategies like engaging in social media and mastering search engine optimization allow for companies to get to market and build buzz much more inexpensively then in the past.

While running efficiently is critical after receiving a series A investment, it’s important that you understand the fine line between being lean and starving your company’s momentum. After you have demonstrated you can get initial product built and you can find someone to buy it, then attention has to turn from proving the idea to scaling the business.

The round: Series B

The trick: Show you can make it repeatable

Anyone can sell something once.  From there, you need to demonstrate that you have a business, not just a cool idea and product.  At the series B stage, it’s all about demonstrating that you can replicate your initial success, and that you have a go-to-market model capable of scaling efficiently and yielding a steady increase in revenue. At the same time sales and marketing expenses should be controlled.

While you want to remain smart in how you spend cash, executing in the series B round is moving into a different spending profile. You’ve got an idea that works; now it’s time to expand.

Rather then just doing things on the cheap, it is important to think about investments to expand and drive the maximum amount of awareness and buzz and market reach and lead flow that you can generate for every penny you spend.

Finally, with expansion and repeatability come customers – and make no mistake, customers can be expensive. A critical key to moving beyond the series B is maintaining innovation and momentum, while effectively managing customers. Most importantly, you should be able to create table-pounding positive customer references you can roll out when you hit the road to raise your next round.

The round: Series C

The trick: Show you can scale it up

Series C and later rounds are primarily acceleration phases. You have shown that you had a great idea, that you were able to translate your brainstorm into a product that works, and that you can generate repeatable revenue.   Now it’s time to show that you have a plan to build a great and durable business for the long haul.

This can include additional products, expanded partnerships, new service offerings, international expansion and indirect sales models. Success here is about articulating with confidence a vision for how you can continue to grow and thrive, while also getting cash flow positive and demonstrating to investors that there is liquidity in your future.

Ultimately that last point – liquidity – is what it’s all about.  None of your investors wrote a check at any round because they liked you.  They wrote a check as an investment, looking for a return. But to get that check, you need to tell them what they want to hear.