business-plan, venture-capital, entrepreneurshipI’ve been invited to pitch to a VC for some start-up money - I already know the guy’s interested because he already seeded a significant sum - but I see now that if I had more, I could take things much further. I mentioned this causally over coffee a couple days ago and he invited me to pitch the idea to him.
I got this first cash infusion based on the idea alone - and that’s still all I have - I don’t know how much the final product can be sold for or what the margins are - I’m not a sales guy. The sales-minded people who would be involved are from the VC’s company, so I’m not eager to pick their brains yet before I talk to the VC directly.
What I do know is that with the extra budget, I can afford to bring the product into a higher state of development and attract a larger market segment.
So my question is: do you have any advice on how to frame my approach? My last success with him was done face-to-face without any PowerPoint or other formalities - but now that I’m knocking on his door again, I think I got to make things more formal.
Maybe this community knows of some good templates for this type of scenario.
All the ones that I found focus on profit margins etc and as I cannot address that head-on, I need a different approach.
Advice? Thanks!
So first things first.
However;
There are several things that can help you get closer to such numbers - or at least hand over more indicators to the VC.
A. Present a budget wherein you include every possible penny that will be spend until this project is ready to go live. I.e. sum up all costs for this project. Including the worth of your time, coffee, servers - everything.
B. Describe different business models to the VC. Is it transactional, cost per action, freemium, in-app purchase, monthly fee - what models that fit your product the best. I.e. tell the VC about possible ways to monetize this (which in his World translates to his ability to get his money back).
If it’s a digital or physical product that is sold piece by piece, consider offering a royalty to the VC on Every product sold (to get him his investment back faster.)
C. Do a market analysis where you identify related or competitor products - outline their business models and pricing structures. Do some calculations for your product with average values from the competitors. Showcase this for xx customers, xxx customers, xx.xxx customers etc.
D. Finally, you’d probably want to know (or know how to calculate) your cost per acquired customer as well as ways to bring this down if the “realized” margin appears to be too low.
Just my input.
Good luck! :-)
I would strongly recommend reading (or listening to) Pitch Anything by Oren Klaff. I recently listened to it on Audible and it completely changed how I think about pitching. You definitely don’t need to be a sales guy to get potential revenue streams/projections/margins across to your audience - you just have to get that sweet mixture of happiness and tension going in the room to get the VCs to buy into your plan.
Other than that, I definitely agree with @SharkX on the CAC (customer per acquired customer) since it will give them an idea of what’s needed cost-wise to get your desired number of users to your product. Also investigating competitor’s models is a great way to get an idea of the models/revenues you could expect (and will also tell you what your users are willing to do if they’re already exhibiting those behaviors with a competitor’s product).
Along the CAC lines, Growth Hacker Marketing by Ryan Holiday is a great read to get the CAC as close to $0 as it can be.
Good luck and congrats on the VC pitch!
All content is licensed under CC BY-SA 3.0.