Using Analytics for Startup Fundraising
Benn Stancil
Mode
Who’s this for?
Who’s this for?
What to pitch, not when or who
Early stage, not growth stage
Who’s this for?
What to pitch, not when or who
Early stage, not growth stage
VC funding, not debt or F&F rounds
Who’s this for?
What to pitch, not when or who
Early stage, not growth stage
VC funding, not debt or F&F rounds
Who’s this for?
The rest of us, not Slack, Bird, etc
What to pitch, not when or who
Source: Business Insider
Source: FutureEngine.org
What’s in
a pitch?
Six things
Your team
Your vision
Your market
1...
2...
3...
Growth and traction
Product stickiness
Acquisition economics
4...
5...
6...
Six things
Your team
Your vision
Your market
1...
2...
Growth and traction
Product stickiness
Acquisition economics
4...
5...
6...
A bit more on these later
3...
Six things
Your team
Your vision
Your market
1...
2...
3...
The more data, the better the pitch!
Growth and traction
Product stickiness
Acquisition economics
4...
5...
6...
How to get that data
Closing tips about pitching
The rest of this talk:
The data investors want to see
Growth and
traction
A venture capitalist
Are people finding your product? Are people willing to pay for it?
Daily active users
How investors look for growth:
Signups
Monthly revenue
Daily active users
How investors look for growth:
Signups
Monthly revenue
What is it?
How many people are signing up.
Daily active users
How investors look for growth:
Signups
Monthly revenue
What is it?
How many people are signing up.
Tips!
Use monthly signups, not cumulative totals.
Daily active users
How investors look for growth:
Signups
Monthly revenue
Daily active users
How investors look for growth:
Signups
Monthly revenue
Daily active users
How investors look for growth:
Signups
Monthly revenue
Daily active users
How investors look for growth:
Signups
Monthly revenue
What is it?
The number of people using your product every day.
Daily active users
How investors look for growth:
Signups
Monthly revenue
What is it?
The number of people using your product every day.
Tips!
Be precise about “active.” Is it a site visit? An particular action? Does interacting with a notification count?
Daily active users
How investors look for growth:
Signups
Monthly revenue
Daily active users
How investors look for growth:
Signups
Monthly revenue
What is it?
How much money you bring in each month.
Daily active users
How investors look for growth:
Signups
Monthly revenue
What is it?
How much money you bring in each month.
Tips!
Daily active users
How investors look for growth:
Signups
Monthly revenue
What is it?
How much money you bring in each month.
Tips!
Daily active users
How investors look for growth:
Signups
Monthly revenue
3x
3x
2x
2x
2x
Year 1 | 1 |
2 | 3 |
3 | 9 |
4 | 18 |
5 | 36 |
6 | 72 |
Product
stickiness
A venture capitalist
Do people use your product? Do they want to keep using it?
DAU/MAU
How investors measure stickiness:
Retention
Quick ratio
DAU/MAU
How investors measure stickiness:
Retention
Quick ratio
What is it?
Either how many users, how many customers, or how much money returns.
User retention
User retention
User retention
User retention
50%
Customer or logo retention
Customer or logo retention
Customer or logo retention
67%
Revenue retention
Revenue retention
$40
$30
$30
Revenue retention
$40
$30
$30
$50
$60
Revenue retention
$40
$30
$20
$50
$60
110%
DAU/MAU
How investors measure stickiness:
Retention
Quick ratio
What is it?
Either how many users, how many customers, or how much money returns.
Tips!
Show the important retention rate, not the best one.
DAU/MAU
How investors measure stickiness:
Retention
Quick ratio
What is it?
In a given month, the average number of daily users divided by the total distinct monthly users.
A few examples
DAU / MAU | Ratio | Days a month |
100 / 1,000 | 10% | 3 |
250 / 1,000 | 25% | 8 |
500 / 1,000 | 50% | 15 |
A few examples
DAU / MAU | Ratio | Days a month |
100 / 1,000 | 10% | 3 |
250 / 1,000 | 25% | 8 |
500 / 1,000 | 50% | 15 |
Ratio x 30
= the average number of days in a month someone uses your product
A few examples
DAU / MAU | Ratio | Days a month |
100 / 1,000 | 10% | 3 |
250 / 1,000 | 25% | 8 |
500 / 1,000 | 50% | 15 |
DAU/MAU
How investors measure stickiness:
Retention
Quick ratio
What is it?
In a given month, the average number of daily users divided by the total distinct monthly users.
Tips!
This is more important for products that are meant to be used frequently.
DAU/MAU
How investors measure stickiness:
Retention
Quick ratio
What is it?
A formula comparing monthly revenue growth to lost revenue.
Month
New revenue
Lost revenue
Net change in revenue
Month
Month
New revenue
Lost revenue
Net change in revenue
DAU/MAU
How investors measure stickiness:
Retention
Quick ratio
What is it?
A formula comparing monthly revenue growth to lost revenue.
Tips!
No matter how fast you’re growing, a leaky bucket will always make investors worried.
Acquisition
economics
A venture capitalist
Can you scale? Can you grow efficiently?
LTV/CAC
How investors measure acquisition:
Payback period
Magic number
LTV/CAC
How investors measure acquisition:
Payback period
Magic number
What is it?
How long it takes for a customer to pay back how much it costs you to acquire them.
Calculating payback period
$500
Calculating payback period
$500
Calculating payback period
$500
Cost per customer: $100
Calculating payback period
$500
$10/month
Cost per customer: $100
Calculating payback period
$500
Cost per customer: $100
$100 in 10 months
LTV/CAC
How investors measure acquisition:
Payback period
Magic number
What is it?
How long it takes for a customer to pay back how much it costs you to acquire them.
Tips!
12 months is considered a healthy payback period.
LTV/CAC
How investors measure acquisition:
Payback period
Magic number
What is it?
The total value of a customer divided by how much it costs you to acquire them.
Calculating LTV/CAC period
$500
$10/month
Cost per customer: $100
Calculating LTV/CAC period
$500
$10/month
Cost per customer: $100
for 2 years
Calculating LTV/CAC period
$500
$240 each
Cost per customer: $100
LTV/CAC
How investors measure acquisition:
Payback period
Magic number
What is it?
The total value of a customer divided by how much it costs you to acquire them.
Tips!
3 is considered a healthy LTV/CAC ratio.
LTV/CAC
How investors measure acquisition:
Payback period
Magic number
What is it?
A formula comparing revenue growth to total sales and marketing spend.
LTV/CAC
How investors measure acquisition:
Payback period
Magic number
What is it?
A formula comparing revenue growth to total sales and marketing spend.
Tips!
A meta-tip!
These metrics are less meaningful for companies with only new customers.
A meta-tip!
These metrics are less meaningful for companies with only new customers.
Don’t worry about them too much early on, but keep them in mind as you grow.
LTV/CAC
Payback period
Magic number
Signups
Daily active users
Monthly revenue
Retention
DAU/MAU
Quick ratio
What do I
do now?
LTV/CAC
Payback period
Magic number
Signups
Daily active users
Monthly revenue
Retention
DAU/MAU
Quick ratio
daily_user_activity
+------------+---------+
| date | user_id |
+------------+---------+
| 03-25-2019 | 1 |
| 03-26-2019 | 1 |
| 03-25-2019 | 2 |
| 03-27-2019 | 2 |
| ... |
+------------+---------+
LTV/CAC
Payback period
Magic number
Signups
Daily active users
Monthly revenue
Retention
DAU/MAU
Quick ratio
monthly_customer_revenue
+--------+----------+---------+
| month | customer | revenue |
+--------+----------+---------+
| jan-19 | Jasmine | 1120 |
| dec-18 | Jasmine | 900 |
| nov-18 | Jasmine | 700 |
| jan-19 | Aladdin | 650 |
| dec-18 | Aladdin | 650 |
| aug-18 | Jafar | 1800 |
| jul-18 | Jafar | 1750 |
| ... |
+--------+----------+---------+
LTV/CAC
Payback period
Magic number
Signups
Daily active users
Monthly revenue
Retention
DAU/MAU
Quick ratio
monthly_customer_revenue +
monthly_sales_marketing_spend
+--------+-------------+
| month | total_spend |
+--------+-------------+
| jan-19 | 2300 |
| dec-18 | 2250 |
| nov-18 | 2110 |
| oct-18 | 1845 |
| ... |
+--------+-------------+
LTV/CAC
Payback period
Magic number
Signups
Daily active users
Monthly revenue
Retention
DAU/MAU
Quick ratio
User table
Revenue table
Marketing table
User table
Revenue table
Marketing table
User table
Revenue table
Marketing table
Spreadsheets
Spreadsheets
Spreadsheets
Decks
Redshift
User table
Revenue table
Marketing table
Redshift
User table
Revenue table
Marketing table
Live Reports
What do I
do now?
Data!
Redshift
User table
Revenue table
Marketing table
Live Reports
bit.ly/founders-meetup-fundraising
A few closing
tips
Create urgency
Some closing tips:
Have a narrative
Markets matter
Create urgency
Some closing tips:
Have a narrative
Markets matter
What’s that mean?
Data alone isn’t enough. You need to tell your story.
Source: First Round Review
Six things
Your team
Your vision
Your market
1...
2...
3...
Growth and traction
Product stickiness
Acquisition economics
4...
5...
6...
Your story connects all these together
Create urgency
Some closing tips:
Have a narrative
Markets matter
What’s that mean?
Data alone isn’t enough. You need to tell your story.
Tips!
Create urgency
Some closing tips:
Have a narrative
Markets matter
What’s that mean?
Data alone isn’t enough. You need to tell your story.
Tips!
Create urgency
Some closing tips:
Have a narrative
Markets matter
What’s that mean?
Data alone isn’t enough. You need to tell your story.
Tips!
Better data
Better story
Create urgency
Some closing tips:
Have a narrative
Markets matter
What’s that mean?
Investors invest because they don’t want to miss out. Don’t let them wait it out.
Create urgency
Some closing tips:
Have a narrative
Markets matter
What’s that mean?
Investors invest because they don’t want to miss out. Don’t let them wait it out.
Tips!
Create urgency
Some closing tips:
Have a narrative
Markets matter
What’s that mean?
Investors invest because they don’t want to miss out. Don’t let them wait it out.
Tips!
Better data
More urgency
From: Fake name
Date: Monday, January 30 2017 at 10:17 PM PST
Subject: Re: Mode follow-up
To: Derek Steer
Derek - this spreadsheet is amazing. I've never seen anything like it. I will be copying it (the format)!
We'll do some forensics.
Great seeing you.
Fake name
A well-known VC
Create urgency
Some closing tips:
Have a narrative
Markets matter
What’s that mean?
No matter how good your product is, you need to show that there’s a market for it.
Create urgency
Some closing tips:
Have a narrative
Markets matter
What’s that mean?
No matter how good your product is, you need to show that there’s a market for it.
Tips!
Create urgency
Some closing tips:
Have a narrative
Markets matter
What’s that mean?
No matter how good your product is, you need to show that there’s a market for it.
Tips!
Better data
Fewer questions
Want more?
A few good resources:
Tom Tunguz’s blog
tomtunguz.com
Jason Lemkin’s Quora
quora.com/profile/Jason-M.-Lemkin
A few good resources:
Tom Tunguz’s blog
tomtunguz.com
Jason Lemkin’s Quora
quora.com/profile/Jason-M.-Lemkin
Social Capital’s Magic 8-ball
analytics.socialcapital.com
A few good resources:
Tom Tunguz’s blog
tomtunguz.com/
Finally...
Questions?
Jason Lemkin’s Quora
quora.com/profile/Jason-M.-Lemkin
Social Capital’s Magic 8-ball
analytics.socialcapital.com
Tom Tunguz’s blog
tomtunguz.com
Mode’s fundraising templates
bit.ly/founders-meetup-fundraising