Get useful input -
have these four things ready before meeting with your VC
There are a lot of way to make your VCs more helpful. Last week I wrote about getting more customer introductions. You should also get useful input during meetings. The worst case scenario for meeting with your VC is getting actively harmful advice. It's also bad to spend time reporting what you're doing without getting any value in return. Assuming you wanted to work with this person, they should be giving you leverage, and having the right information sets them up to do that.
All of the items in this list are ones you need to manage your business effectively at the early stage, not just ones a VC might ask for. They should be helpful on their own, regardless of the meeting. That said, they’re an easy way to get everyone on the same page and prevent misunderstandings. You don't necessarily need to walk through each of these items every meeting, but you'll want to have them at hand to pull up as needed.
1 - Cash, Burn, & Runway
This one shouldn't need to be said, but often right after a raise (we raised and we have so long now!) people will stop to be as diligent about keeping this in mind. The months go by quickly. While you can derive the third from any two, having all three helps maximize the chances of someone saying "hey, this worries me" instead of missing it.
2 - Revenue by Customer
Here’s a very simple customer revenue template, with the most important items in green.
At an early stage Enterprise company (especially in this market) you'll want to have details of design partners/ first customers by name, how much they are paying, and their planned expansion over time. Year by year you'll be able to see how cohorts are progressing. Another option is to break this out quarter by quarter, which can give you an earlier sense of the trend. There are many other options of things you can add to this depending on what matters to your business, which I’ve added in yellow.
Pipeline
If you’re heavily focused on early customer adoption, it’s important to put pipeline companies in here with similar details - use case, projected revenue, etc. If you’re focused on pipeline, it makes even more sense to break the template out by quarters instead of years.
Prospects
Last week I shared a similar template from Dakota McKenzie you can use to discuss prospects. At some point the prospects may be promoted into the pipeline discussion. If you’re actively soliciting introductions from your VC, it’s helpful to have this handy.
Usage
You might also want additional data beyond customer revenue data. Especially in a company that couples a bottoms-up motion with the top down sale, you'll want to see usage and usage expansion. This might be the only information you have early on. Depending on the complexity of the revenue and usage data and what you want to focus the conversation on, you might put both things in one spreadsheet or split it into two.
This could include information like:
"Is the implementation / integration finished?" or other steps of getting from a contract to real usage at a customer. Customers who paid but don’t use the product are high churn risk.
Number of active users and/or teams and/or types of users (like devs vs. SREs)
Frequency of activity for users/teams (daily usage vs. weekly vs. monthly)
Expansion to additional use cases by existing teams
This the data that helps enrich the story you tell around revenue and customers, and helps you target additional customers (see this piece of getting customer intros) and see what your overall story looks like.
3 - Where your time is going
One of the most precious resources a startup has is the founder's time. As a founder, it sometimes feels like you're treading water. Being upfront about what your time is being devoted to can help an investor contextualize if something can be changed. A VC can help you answer the question “is this normal?”
Sometimes you are in a slog. If your time is going towards talking to early customers, spending time with your community, and iterating on what to build, that's probably the right call. This phase can take longer than you want, but you're working on the right things.
On the other hand, if you're spending your time on coaching a specific person, logistical overhead, or all on one discipline, it might be time to look at making some adjustments. An external set of eyes can help you accept that you need to make a change, or talk through how to do it.
4 - What you need to learn or unblock
This is where the bulk of the time in conversations should be going. This is often where founders will jump to. Since you’re in it, you want to be efficient with time and go straight to your question/ask - for example, "we need to hire DevRel to get more leads.”
When everyone is on the same page it’s easy to get into a productive back and forth discussion. By being on the same page about the customers who are succeeding, their use case, and where they come from, you’ll be able to have a deeper conversation about which hires and tactics will unlock growth. Alternatively, you might also see through the data that usage isn’t great - indicating more leads won’t help the business yet.
Another example could be - "I need to talk to a great sales leader because I don't know how to get through this enterprise procurement process." If the existing customers are thriving and procurement is the big issue, a VC can help you talk to someone who is an expert in maneuvering those challenges. If the customers who work best aren’t huge, it might make sense to “fire” those prospects.
Throwing something out as a starting point helps you work through it together. By having the right information available, it helps waste a lot of time “digging” to understand the question and its context
.