Without a clear request, your pitch deck is useless – TechCrunch
you swept your Keynote skills, you’re giddy that you can finally start paying yourself a living wage, and you’re excited to start pitching your startup’s next round of funding to your investors. Sure it’s exhilarating, but step on the other pedal for a moment, my friend – you might be forgetting something.
After working with hundreds of founders to raise funds — including the insanely popular Pitch Deck Teardown series here on TechCrunch+ — there’s one slide that nearly every founder is horribly wrong on. The slide is often called Requirement. Or, as an investor friend calls it, “what will my $10 million buy me”? drag.
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Demand is a hot topic for many inexperienced entrepreneurs, which makes sense. Trying to properly size a funding round can be a bit overwhelming, and there are a thousand different ways to build a startup. If you managed to raise $8 million, you can do it one way. If you raised $12 million, you might be able to launch more features of your product a little faster, or experiment more, or target an additional market sooner. You know. Your senior executives know it. Your investors know it. But either way, you need a plan A.
What do these key metrics need to look like to raise not this round of funding, but the next one?
What should you do?
Many founders will tell you that they are trying to raise enough money to survive for the next 18 months. That’s probably true, but it will be true no matter how much money you raise. A better approach is to think about what you need to accomplish to increase your Next funding cycle and then work backwards from there. It’s probably a combination of metrics and milestones.
Metric are the measurable parts of your business that grow and evolve over time. One of the best metrics you have is revenue, but there could be many more: number of sales, average order value (AOV), monthly or yearly recurring revenue (MRR or ARR, respectively). ), customer acquisition cost (CAC), number of customer lifetime value (LTV), daily and monthly active users (DAU and MAU), retention rate (usually expressed by its inverse, churn rate) and many Moreover. What do these key metrics need to look like to raise not this round of funding, but the next one?
Milestones are also measurable parts of the business, but instead of tracking them over time, they tend to be binary: either you hit a milestone or you haven’t. For startups, these can be key hires; Finding the perfect, experienced CFO who can help you take your business public is a big step that many companies have to take at some point. Product launches (coming out of beta), specific market launches (launch only in California), and localization (launching your app in Spanish and French, for example) are also important milestones. Financial milestones are also common; the first time you make a single dollar from a customer is a huge change in the business. When a customer, on average, starts making you more money than it costs you to acquire them, that’s another thing. For start-up businesses, completing a customer validation phase by talking to, say, 100 potential customers is a big milestone.
When you fundraise, you map out a set of milestones that you must achieve in order to validate your business. Additionally, you’ll set a number of trigger points for the metrics – hitting $1 million ARR, having 5,000 daily active users, or finding a combination of customer acquisition channels that means you can acquire customers at a Reasonable mixed CAC, for example.
So let’s look at how to create a great “demand” slide by figuring out what it takes to figure out how much you need to collect, how to create a specific set of goals, and how to pull it all together into a cohesive whole.