I have nothing against the investor class, but sitting in a room with several VCs trying to sell them based on my billion dollar idea sounds very stressful.
When an investor inevitably asks founders about their valuation expectations, that’s a trick question of the highest order. If the response is too high, it’s a red flag, while a low number will undervalue the company.
“We’ll let the market price this round” is a confident answer, but it’s only appropriate if you’ve actually collected substantial data points from other investors — and can respond with a few questions of your own, says Evan Fisher, founder of Unicorn Capital.
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“If that’s all you’re saying, you’re in trouble because it could also be interpreted as ‘we have no idea’ or ‘we’re taking what we’re given,'” Fisher said.
Rather than go cold, he advises founders to pre-pitch investors for their next round and use takeaways from those conversations to shape current valuations.
In the article, Fisher includes sample questions “you’ll want to ask any VC you speak with,” along with other tips that will help “when they ask the valuation question.”
A pitch is a business meeting, but on some level it is also a game where investors hold all the cards and always win. To level the playing field, founders need to think one step ahead.
Thank you for reading,
Editorial Manager, australiabusinessblog.com+
Twitter Space: Do tech media create ‘charismatic’ founders?
Large-scale entrepreneurs are nothing new, but technology has taken that to the next level, often with the help of news media.
On Tuesday, December 13 at 1:00 PM PT, Builders VC investor Andrew Chen will join me on a Twitter Space to discuss the role technical reporting plays in shaping ecosystems, stories and expectations.
This should be a lively conversation, so please bring your comments.
The Climate Founder’s Guide to the Inflation Reduction Act
The Inflation Reduction Act goes far beyond reducing costs for American consumers: Congress has earmarked $369 billion to fight climate change, creating new opportunities and incentives for thousands of entrepreneurs.
In a detailed post exploring the IRA’s impact on green fintech, electrification, carbon capture and other areas, investor David Rusenko and Floodgate Fund director Leeor Mushin share their “understanding of the regulatory ramifications of this monumental bill.”
To prepare for a downturn, build a three-case model
Startups that develop case models are better equipped to handle potential setbacks. Visualizing exactly how potential market shifts could affect your business is a great way to prepare for the unexpected.
A three-case model attempts to predict best-case, down-case and base-case scenarios, writes Matt Barbieri, partner-in-charge at accounting firm Wiss & Co.
“Usually the base case falls between the extremes. For example, in financial modeling you could say that Peloton has experienced both its ‘best case’ and ‘down case’ scenarios within a year.’
In uncertain times, B2B sales teams need to put value first
At a time when companies are looking for ways to reduce SaaS spend, sales teams need to focus on ROI and value, said Ketan Karkhanis, EVP and GM of Sales Cloud at Salesforce.
In a post for TC+, he shares tactics that successful B2B sales teams use to coach prospects through the sales funnel while building relationships through personalized interactions.
“Many customers feel lost,” he writes. “They are confused by the economic volatility and overwhelmed by a deluge of information.”
“Serving as a coach who brings personalized, relevant information to the right stakeholders without rushing to closure is key to building trust.”
Pitch Deck Teardown: Rootine’s $10 Million Series A Deck
In 2018, australiabusinessblog.com reported that health and wellness startup Rootine was preparing to enter the US market after accumulating “1,500 paying customers in Europe”.
Four months ago, the company, which sells a $70/month subscription to multivitamins, announced it would buy $10 million in Series A.
If you want to read all 29 unresponsive slides, click through for our latest pitch deck teardown.
Dear Sophie: How do technical layoffs affect PERM and the green card process?
I handle HR and immigration at our technology company. We filed a PERM for one of our team members for her EB-2 green card about five months ago, and we are awaiting certification from the Department of Labor. We are preparing to start PERM for another employee.
Will the Tech Industry Layoffs Affect the PERM Process for EB-2 and EB-3 Green Cards? What happens to my team members’ green cards if our company has to make layoffs?
– Thinking in People Ops
To win over investors, use growth as your differentiator
Despite the doom and gloom, investors still meet founders as they look for places to park their money. Suave storytelling skills are good, but they’re not enough: once you’re in the room where it’s happening, it’s critical to make the best use of everyone’s time.
To make investor buy-in more likely, Jon Attwell, leader of the Seedstars Growth Track, advises teams to create metric customer journey maps detailing “all the mini-processes customers go through and the paths they follow. ”
Growth projections are nice, but showing investors concrete plans for onboarding and retention, reducing churn and addressing other growth drivers can show how well you understand your market.
“For investors, it’s a rare treat to see an obsession with the detailed metrics of a customer journey,” Attwell writes.