“SUCCESSFUL PROJECT WITH $ 1 MILLION INVESTMENT MUST EXIT FOR $ 100 MILLION FOR 7 YEARS »
In June, Minsk hosted a major IT event Emerge. Speakers from Microsoft, Google, WhatsApp, Wargaming and 60 other companies shared insights from various industries.
From VR, the search for investments, artificial intelligence and development to the creation of in vitro products and threats to mental health.
We recorded the most interesting performance of Daniel Hastik, a partner in Nextech Ventures venture capital fund, the creator of online businesses around the world. He shared recommendations on how to start a startup to attract investors.
How to find an investor
Investors are living people with their interests and outlook on life. If the entrepreneur does not cause personal sympathy, the investor is unlikely to invest in the project. In the first place – a man, and only then the idea and the market. Look for those with whom you have intersection points.
To find an investor or business angel, study the portfolio of projects with which he already works / worked – often they have a “specialization”.
If you meet at a startup event, before telling about yourself, ask the investor the right questions: why is he here, who is he looking for, and how can you help.
An investor rarely works alone, usually a team. Find out who makes the decisions and try to communicate with this particular person.
It is important for investors to see exit strategies. Think over the options that you can offer at the presentation of the project. When can I start a stock sale? Which companies might be interested in your startup? Who wants to buy a project? Who can I join with?
“Feed small fish big” – in the interests of investors. They divide the projects into those with which you can earn average income for a long time (“milk cows”) and those that can be profitably sold (“meat cows”).
What indicators are important for a startup
To assess the financial prospects at the startup planning stage, collect data:
– about the total market volume (Total Available Market, TAM)
– about already occupied and potentially free market share
– on industry development trends (growth, decline, plateau)
– about market value (Market Value – how much can be obtained from the market at each stage of product development)
– about the possibilities of entering international markets
Part of the information can be found in open research, but the most important insights you get from industry experts. This data is important both for you and for investors.
Which SaaS startup is considered successful?
A successful project with investments of $ 1 million should reach $ 100 million within 5-7 years. Growth is according to the formula “three times, three times, twice, twice, twice” (T2D3 – triple, triple, double, double, double). An approximate diagram can be seen on the graph.
How to evaluate the success of a business.
Columns – the number of days required to reach each mark. The first stage is the most difficult, because one cannot expect a quick return from an unknown project.
Business Success Metrics
NPS (Net Promoter Score, consumer loyalty index) – the probability that the product will be used.
CLV (Customer Lifetime Value) – the planned profit from one client / user segment during the entire time of interaction with the product.
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CAC (Customer Acquisition Cost). Here you need to consider all costs – from product development, marketing and advertising to salaries and office rent.
MRR / ARR (Monthly Recurring Revenue / Annual Recurring Revenue) – monthly or annual profit from regular payments (subscription model).
EBITDA (Earnings before interest, taxes, depreciation and amortization, pre-tax profit) – profit before interest, taxes, depreciation.
A dashboard with these indicators should be constantly accessible for the team and investors.