December 4, 2023

I ignored Your Keynote skills, you’re dizzy because you’ll finally be able to start paying yourself a living, and you’re excited to start pitching your startup’s next round of funding to investors. It’s tough times, sure, but press the other pedal there for a moment, my friend—you might forget something.

After working with hundreds of founders on fundraising — including the popular Pitch Deck Teardown series here on TechCrunch+ — there’s one chip that nearly every founder gets wrong. The chip is often referred to as question. Or, as an investor friend calls it, “What $10 million would I buy me”? slipping.

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Ask is a sensitive topic for many inexperienced entrepreneurs, and it makes sense. Trying to decide the right size for a funding round can be a bit overwhelming, and there are thousands of different ways to build a startup. If you succeed in raising $8 million, you can do things one way. If you raise $12 million, maybe you can launch more features of your product a little faster, try more, or seek additional market earlier. do you know that. Your senior employees know this. Your investors know this. But regardless, you need a plan A.

What should these key metrics look like to increase not this funding round, but the next?

what do you want to do?

A lot of founders will tell you that they are trying to raise enough money to survive for the next 18 months. This may be true, but it will be true no matter how much money you raise. The best approach is to think about what you need to achieve to raise your level next one A round of financing, and then work backwards from there. Perhaps this is a combination of metrics and milestones.

metrics They are the measurable parts of your business that grow and evolve over time. Revenue is one of the best metrics you have, but there may be many others: number of sales, average order value (AOV), monthly or annual recurring revenue (MRR or ARR, respectively), customer acquisition cost (CAC), and customer lifetime value (LTV), daily and monthly active users (DAU and MAU), retention rate (usually expressed by its inverse, rip rate) and much more. What should these key metrics look like to increase not this funding round, but the next?

Milestones They are also measurable pieces of work, but rather than track them over time, they tend to be binary: you either have reached a major milestone or you haven’t. For startups, this can be a prime hire; Finding the ideal and experienced CFO who can help make your company public is one of the major milestones that many companies need to achieve at some point. Product launches (which are out of beta), launches in certain markets (launches in California only), and translation (launching your app in Spanish and French, for example) are also important milestones. Financial milestones are also common; The first time you make a dollar from any client is a huge business shift. When, on average, a customer starts making more money than it costs you to get it, that’s another thing. For early stage companies, completing the customer validation stage by speaking to 100 potential customers, for example, is a milestone.

When you raise funds, you will identify a set of milestones that you need to achieve in order to validate your company. Additionally, you’ll define a number of operating points for metrics – up to a million ARR, have 5,000 daily active users or find a set of customer acquisition channels which means you can get customers in a reasonable hybrid CAC, for example.

So let’s examine how to put together a great “subtract” slide by making sure what it takes to determine how much you need to collect, how to create a specific set of goals and how to put it all together into a cohesive whole.

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