Milestones That Get Investor Interest = Traction

FOUR TRACTION POINTS THAT INTEREST INVESTORS

MILESTONES OF FUNDING NEW VENTURES

By Kelly [email protected]

Prepared for Tech Foundry Accelerator Fall 2014

FOUR TRACTION POINTS

1. Idea2. Product3. Business model4. Expansion

A STARTUP IS A TEMPORARY ORGANIZATION DESIGNED TO SEARCH

FOR A REPEATABLE AND SCALABLE BUSINESS MODEL

INVESTMENT READINESS LEVEL

Mkt Size/Competitive analysis

Complete first-pass canvas

Problem/Solution Validation

Low Fidelity MVP Experiments

Validate Product/Market fit

Validate right side of canvas

Prototype High-Fidelity MVP

Validate left-side of canvas

Validate metrics that matter

Friends and Family

Angel investors

Venture Capital

None

$1B+ Market? Scalable Solution? Recurring Revenue?Past Successes? Full team? (Hipster, Hacker, Hustler)Traction?

Investment Interest Level

DREW HOUSTON, CEO DROPBOX

DEVELOPING YOUR IDEA

How do I get funding at this stage?

Do it yourself (and learn.)

SWEAT EQUITY


Nothing beats a good conversation.

GET OUT AND TALK TO POTENTIAL CUSTOMERS

DEVELOPING YOUR IDEALean Startup Principle:

Examples: Lean Startup Challenges, Startup Weekends, Launchrock, Mock ups, WIX, Code Training, Hackathons, etc.

USE FREE/CHEAP RESOURCES AND TEST

DEVELOPING YOUR IDEAGoal:

VALIDATE ASSUMPTIONS -FIND POTENTIAL CUSTOMERS


What does traction look like?

Examples: 100 – 1000 possible users/emails, 10-15 potential customers, 2-3 letters of intent, 1 enterprise client MOU

COMMITMENTS

CREATING YOUR PRODUCT

How do I fund my prototype?

Get creative. Leverage your network. Reach out to friends, family, customers, Kickstarter, Indiegogo, and similar sources.

Tell your story. Make a little go a long way.

ASK THOSE YOU KNOW

CREATING YOUR PRODUCTEssentials Actions:

BUILD A TEAMInclude a hipster, a hacker and a hustler;

In other words, every good team needs a designer, a developer and a business person.


Lean Startup Principle:

• Build an MVP of MVP (Minimum Viable Product of Most Valuable Piece)

• Use API’s and other existing resources when possible

VALIDATED LEARNING


GOAL:

• Paying customers• Product usage

VALIDATE PRODUCTREAL CUSTOMERS



Examples: 10,000 downloads, 1000 daily active users, 100+ paying customers, 1 paying enterprise client with 100+ seats ($3K - $5K/month), etc.

PROOF OF VALUE TO CUSTOMERS

PERFECTING YOUR BUSINESS MODEL

How do I fund this thing?

ANGELSPrepare your 10 point pitch and share your traction with angel investors, networks, funds, Angel.co, etc.

You Need to Get Here!Product/Market Fit: LTV/3 >= CAC

You Are Here

You’ve only just begun


PERFECTING YOUR BUSINESS MODELEssentials Actions:

Acquisition Activation Retention Referral Revenue.CONVERSION METRICS


Lean Startup Principle:

Measure progress and prioritize work.

INNOVATION ACCOUTING

PERFECTING YOUR BUSINESS MODELGOAL:

This equals successful monetization

REPLICABLE / SCALABLEBUSINESS MODEL



*cost of acquisition is less than 3x lifetime value; $1 in, $3 out

• Enterprise: 1000 seats @ $10/seat/mo., • Big Enterprise: 2 pilot contracts and some $• Social: 100,000 downloads/signups• Marketplace: $50,000 revenue/mo. • E-Commerce: $50,000 revenue/mo.

CAC < 3X LTV

EXPANSION OF YOUR PRODUCT

How do I fund this thing?

CASHFLOW? ORVENTURE CAPITAL?

Meet with a dozen venture capital firms to find fit and funding for growth.


Essentials actions:

Execution to metrics, revenue, profits,team growth, key frustration process improvement and acquire niche companies.

CONSISTENT GROWTH


Lean Startup:

Build, measure and learn

BML


GOAL:

What does the door look like: Buyout or IPO?

INVESTOR EXIT



Consistently driving customer acquisition and revenue as expected. Finding new avenues for revenue growth.

ONGOING ROLLOUT

EXPANSION OF YOUR PRODUCTNext steps:

Meet with investment bankers and M&A specialists

PREPARE TO PITCH

QUESTIONS?

START HERE. GO FURTHER.

WWW.ELEVATEVENTURES.COM

Technology

Milestones That Get Investor Interest = Traction