2014 kotra: showing traction to investors
Post on 18-Oct-2014
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Based on the work of Brendan Baker and Martin Zwilling, This deck enumerates items to include in your pitch deck to help demonstrate traction to potential investors.TRANSCRIPT
© 2014 Luxr Incorporated www.luxr.co
Showing Traction To InvestorsPreparing Startups for a Brighter Future
March 14, 2014Janice FraserJason Fraser
© 2014 Luxr Incorporated www.luxr.co
Follow Us
@luxrco
Hashtag
#leankotra
© 2014 Luxr Incorporated www.luxr.co
Martin Zwilling
http://www.alleywatch.com/2013/06/10-keys-to-startup-traction-that-investors-look-for/
@StartupPro
© 2014 Luxr Incorporated www.luxr.co
10 things that demonstrate traction1. Documented business/product plan (Business Model
Canvas)
2. Some completed milestones
3. A well-rounded team
4. Qualified Advisors
5. Minimum product released and validating
6. Real Customers/Real Revenue
7. Registered IP
8. Letters of Intent or endorsements
9. Personal investment
10. Be a dedicated expert in your field (Know your stuff!)
© 2014 Luxr Incorporated www.luxr.co
Brendan Baker
http://www.quora.com/Brendan-Baker/Posts/Startups-How-to-Communicate-Traction-to-Investors
@brendanbaker
© 2014 Luxr Incorporated www.luxr.co
Traction = Strong Forward Momentum
demonstrated by
“quantified evidence of market demand for your product”
© 2014 Luxr Incorporated www.luxr.co
8 things you can do to improve your traction story
& 2 things you should never do
© 2014 Luxr Incorporated www.luxr.co
Each of these tips is about framing your story
If, when you frame your story properly it’s still not convincing,
then you have more work to do on the product.
© 2014 Luxr Incorporated www.luxr.co
Tip 1: Compress your X-Axis
Company founding (Aug 2010)
Today
Some
Lots
© 2014 Luxr Incorporated www.luxr.co
This looks slow.
Company founding (Aug 2010)
Today
Some
Lots
© 2014 Luxr Incorporated www.luxr.co
Check that your start dateis accurate.
You want to demonstrate that growth happened quickly.
Did you start in 2010 and now you have 5000 users? (125 users/month)
Or did you start the company in 2010, but open to the public in late 2012 and now you have 5000 users? (333 users/month)
© 2014 Luxr Incorporated www.luxr.co
The blue line shows growth from Launch.
Company founding (Aug 2010)
Today
Public Beta Launch(Dec 2012)
Today
Some
Lots
© 2014 Luxr Incorporated www.luxr.co
That’s a lot more impressive.
Some
Lots
Public Beta Launch(Dec 2012)
Today
© 2014 Luxr Incorporated www.luxr.co
Tip #2: Choose your X-Axis
You can use all kinds of numbers for the X-Axis, to show traction:
TimeProduct IterationsMarket ReleasesSales Cycles (academic terms, etc.)Etc.
© 2014 Luxr Incorporated www.luxr.co
Iterations instead of time
1st release
Some
Lots
2nd release 3rd release
© 2014 Luxr Incorporated www.luxr.co
Tip #3: Reduce Expectations
Provide proper context for your numbers:
Are you in a closed beta?
Have you generated lots of interest with no investment?
If numbers are low now, what compelling evidence do you have that they’ll go up quickly?
© 2014 Luxr Incorporated www.luxr.co
Public Beta Launch(Dec 2012)
Today
Some
Lots
Tip #4: Choose your Y-Axis
© 2014 Luxr Incorporated www.luxr.co
Public Beta Launch(Dec 2012)
Today
Some
Lots
Revenue
© 2014 Luxr Incorporated www.luxr.co
Public Beta Launch(Dec 2012)
Today
Some
Lots
Profit
© 2014 Luxr Incorporated www.luxr.co
Public Beta Launch(Dec 2012)
Today
Some
Lots
Engagement
© 2014 Luxr Incorporated www.luxr.co
- Profitability- Revenue- Active users- Registered users- Engagement- Partnerships/clients- Traffic- Low CAC/High Lifetime Value (my own addition)
Y-Axis options, in order of persuasiveness:
Choose the one that shows your growth.
© 2014 Luxr Incorporated www.luxr.co
Tip #5: Use Absolute and Growth numbers
Absolute: We have X (number) now.
Growth: We grew Y% per time period.
An absolute number with no (or a low) growth number is dead.
© 2014 Luxr Incorporated www.luxr.co
We have 5000 now.
The growth rate is ______% per _______.
This tells a story and lets your investor imagine the future.
18 month
(absolute)
(growth)
© 2014 Luxr Incorporated www.luxr.co
Tip #6: For b2b, tell a story of a customer
(NOT how much they love your product or how it changed their business.)
How much has usage grown? What’s the future potential?
(using numbers)
© 2014 Luxr Incorporated www.luxr.co
Tip #7: Benchmark against a known competitor
This can put growth into perspective.
(Choose comparisons carefully.)
© 2014 Luxr Incorporated www.luxr.co
Tip #8: Annotate a graphEasy way to demonstrate growth
Combine with tips 1 and 2 with this to create powerful graphs.
Annotation serves to compress the X-Axis by providing reference points.
Annotation allows you to keep the X-Axis as time, while still breaking it up into meaningful segments.
© 2014 Luxr Incorporated www.luxr.co
0
250
500
750
1000
August September October November
Private Beta (web only)
Android& iOS
Web Launch
© 2014 Luxr Incorporated www.luxr.co
Do Not:
Do not use testimonials.
Do not use press mentions.
Investors don’t care what people say about you.
NO ONE cares what the press says about you.
© 2014 Luxr Incorporated www.luxr.co
Instead:
Name major clients.
Use statements of support from major industry groups.
Big name clients provide validation.
Gartner, Consumer Reports, etc.
© 2014 Luxr Incorporated www.luxr.co
- Profitability- Revenue- Active users- Registered users- Engagement- Partnerships/clients- Traffic- Low CAC/High Lifetime Value
Which of your numbers are most likely to tell an effective growth story?
Prompt:
© 2014 Luxr Incorporated www.luxr.co
- Profitability- Revenue- Active users- Registered users- Engagement- Partnerships/clients- Traffic- Low CAC/High Lifetime Value
Where could you get those numbers?
© 2014 Luxr Incorporated www.luxr.co
Homework:
Use the Baker tips to improve your traction slide.
Use the Zwilling checklist to identify what else you need.
© 2014 Luxr Incorporated www.luxr.co
Zwilling’s Checklist for Showing TractionDocumented business/product plan (Business Model Canvas)
Some completed milestones
A well-rounded team
Qualified Advisors
Minimum product released and validating
Real Customers/Real Revenue
Registered IP
Letters of Intent or endorsements
Personal investment
Be a dedicated expert in your field (Know your stuff!)
© 2014 Luxr Incorporated www.luxr.co
Baker’s Checklist for Showing TractionCompress your X-Axis
Choose your X-Axis (carefully).
Reduce expectations (by setting appropriate context).
Choose your Y-Axis.
Use Absolute and Growth numbers.
Tell a story of a customer (for B2B).
Benchmark against a known competitor.
Annotate a graph.
DO NOT use testimonials.
DO NOT use press mentions.