Clinching series A pear
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Transcript of Clinching series A pear
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Clinching the Series A
Mar Hershenson, Managing Partner Pear
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You’ve just raised your Seed Round
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Raising an A round is much harder
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Completely Different Landscape
Seed Series A
4
100s angels, seed funds ~20 target A funds
Quick, simple
Hope
Slow, not as simple
Data
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More Funds in Seed
NumberofAc,veSeedFunds
2010 2011 2012 2013 2014 2015
236
150
112
654233
Source:CBInsightshttps://www.cbinsights.com/blog/past-present-future-micro-vc/
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InvestorsRegisteredonAngelList
502,500
18,000
30,057
More Angels
Source:Techcrunch,HarvardBusinessReview,AngelList
2/2010 12/2011 6/2013 11/2016
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Seed Rounds with Follow-on As
0%
10%
20%
30%
40%
0
750
1,500
2,250
3,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Total Seed Deals Series A Follow-on % of Follow-on
Source:Pitchbook,Q22016VCReport
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.. but people do climb Everest
1- Figure out where you are going
2- Make a plan, execute, iterate
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Figure out where you are going
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What company will I be at Series A?
Revenue AudienceTechnology Founder
Our Focus
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Word on the Street
E-commerce
$500k-1M MRR 20% m-o-m growth
SaaS
$100k-200k MRR 100% y-o-y growth
Consumer
50k DAUs 25% m-o-m growth
Source:Equityzenblog
Marketplace
$500k-1M GMV 25% m-o-m growth
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Little Single Metric CorrelationSaaS MRR-Valuation
0
45
90
135
180
20 35 50 65 80
MRR
($M
)
Post Money Valuation ($M)Source: Thomas Tungunz, Redpoint
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Growth is not Enough
13
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VCs question future success
How do I know if revenue will reach $10M? $100M?
Are sales scalable, profitable?
How do I know if that enterprise deal going to
expand? Repeatable?
How do I know if it will reach 10M
active users? 100M? Will the
CAC scale?
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VCs look for predictors of future success
Engagement
Daily Active Users Product Quality
Activities per User
Retention
New, churned and resurrected users/accounts
User Quick Ratio
Unit economics/Margin
Life Time Value Customer Acquisition Cost
Cost of sales
Growth/Scale
Organic/Inorganic growth Recurring Revenue
Cash burn
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Growth Quality (Quick Ratio – Added MRR/lost MRR)
Source:DiligenceatSocialCapitalPart1.Medium
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Cohort Analysis - RetentionCohort
Size0 1 2 3 4 5 6 7 8 9
110 Jan 100% 33% 21% 16% 14% 13% 12% 12% 10% 12%
186 Feb 100% 31% 21% 14% 13% 12% 11% 11% 9%
184 Mar 100% 29% 18% 16% 14% 12% 10% 9%
225 Apr 100% 35% 29% 22% 20% 17% 15%
231 May 100% 42% 37% 34% 24% 21%
209 June 100% 44% 37% 33% 25%
240 Jul 100% 42% 38% 31%
271 Aug 100% 45% 40%
248 Sep 100% 51%
243 Oct 100%
2,147 Total 100% 39% 30% 24% 18% 15% 12% 11% 10% 12%
Source:DiligenceatSocialCapitalPart2.Medium
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Super-Fans(Completed Key Actions/Week/Active User)
0
13
25
38
50
1 2 3 4 >5
Completed Key Actions
% A
ctiv
e U
sers
SuperFans
Source:JoshElman,GreylockPartners
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Good Metrics Not Enough
MARKET SIZE MARKET DYNAMICS
CHEMISTRYTEAM
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Plan Execute
& Iterate
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Make an Ops Plan
Q1 Q2 Q3 Q4
Revenue $1MARR
New Hires
Product
Cash @ end
$100kARR100leads
1DemandGen 1Sales
Rev2.0
1CustomerSuccess
3Engineers
MVP
1Sales1QAEngineer
18months 15months 10months 4months6months
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“What gets measured, gets done”
Georg Rheticus, Astronomer 1514-1574
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Display Dashboards to Team
100 Leads
50 Demos
20 Conversations
10 Closed
MRR TIME TO CLOSE
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Keep Iterating
Plan
Execute
On track? YESNO
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1/3 Seeds do a Second Seed
2007 2009 2012 2014 2016
13%15%
17%19% 18%
21%
25%
29%32%
34%
Source:Pitchbook,Q22016VCReport
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Climb down Mount Everest
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The actual raise
Build First
Rational ask
Time it right
Target list
Practice the pitch
Run the process
Speak data
Diligence investors
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Climbing Everest is Hard!
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… but Possible
Get help from a sherpa
Plan & work
Re-plan (if needed)