Today, we’re talking about what should be your primary metric.
1. For most businesses, you should be looking at revenue. For SaaS businesses that’s usually monthly or annual recurring revenue, whereas a marketplace might measure transaction volume over time.
2. If you’re not charging or it doesn’t make sense yet, then you should focus on engagement. Engagement means people are reliant on your product — and that doesn’t always mean logging on everyday. Perhaps your power users only need to visit a couple of times a week or you’re a background service that only surfaces in emergencies.
3. Lastly, if your product isn’t live or for some reason you can’t measure engagement — maybe your service is heavily oriented around privacy — well, then you can measure distribution, e.g. app downloads or waitlist signups. But honestly, it’s nowhere as valuable an indicator as engagement or revenue.
Today, we’re talking about projections for investors.
Many founders spend hours agonizing over projections they’re sending to investors. What should I include? How detailed should I go? Here’s what you should expect to provide:
If you’re raising under $2M: Projections are usually just 1 sheet, of 10–12 lines covering salaries, cogs, marketing, office/equipment & admin (e.g. legal & government filings).
Then if you’re raising more, let’s say $2–5M: It’ll be the same first sheet from the previous example + a breakdown of distribution, revenue growth & a hiring plan. Usually 3–5 full sheets.
These projections will not survive contact with reality so there’s no point getting too worked up about them. If in doubt, send it to a friendly investor and ask for feedback.
Today, we’re talking about avoiding one time payments as a SaaS business.
Sometimes it may seem attractive to take a one time fee from a customer, usually for something like consulting or development services. Try to avoid this if you can. Instead, increase the price of the customer’s annual plan proportionately. You can still ask for all or some of the money upfront. I usually suggest asking for 3 months paid in advance.
But with this approach you’re increasing your recurring revenue, with a small hit to overall margins but most importantly: you get to start next year’s contract negotiations at a higher price point. You’ve already upsold them!
Today, we’re talking about announcing your round to raise more.
One of the best ways to generate new investor interest is to announce a previous round of funding. You’ll be amazed at how many investors, old and new, suddenly appear in your inbox, keen to learn more. Some will want to invest now to avoid missing the boat, others, usually later stage institutions, may want to connect before the “next” round.
Now if we’re announcing a previous round, then maybe we’ve had time since that last round closed for some additional, exciting growth and coincidentally, we just happen to be ready for the next round, right now.
Today, we’re talking about resilience and execution.
4 years ago I invested in a company called Twine, that last year they spun out as a new company called Knoetic. And Knoetic announced a big funding round this week to much fanfare.
But most of it has been hard for that…
Today, we’re talking about using compliance to close sales.
Everybody hates dealing with compliance, it’s a huge hassle. However, I often see it as a deciding factor for enterprises when choosing a vendor. They may want the latest, trending software discussed online but unless it’s compliant with their regulations, they cannot buy.
Now, this creates an opening for your startup. If you’re willing to do the hard work of being compliant for SOC 2, HIPAA or others, then you can massively improve your chances of closing an enterprise sale, as well as creating a barrier to entry for competitors.