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Equity Crowdfunding Checklist There are several key elements to running a successful equity crowdfunding campaign. Here’s a checklist to consider: Create a campaign plan — list of what you will promote and when.  This includes updates, events, and other activities to promote your fundraise. Build the campaign documents — the…

How to Find More Investors for Crowdfunding Campaigns In running a crowdfunding campaign, you may need to find additional investor groups for your fundraise. These investors include those who are interested in your industry category, or have a passion for the cause, or share the same affinity for the product…

What to Do for a Successful Crowdfunding Launch Before launching your crowdfunding campaign, make sure you do the following: Create high-quality images and videos for the campaign page.  Poor visuals reflect poorly on the company. Create a well-organized and compelling story about your fundraise. Focusing solely on the product and…

Telling Your Story in a Crowdfunding Campaign  Storytelling is an effective tool in a fundraise. Here are some key points on how to tell your story in a crowdfunding campaign: Start with your overall cause, such as helping students graduate or improving people’s wellness. Call out your value proposition upfront…

Testing Your Deal for a Crowdfunding Raise Crowdfunding works well with certain types of products and businesses. Consider these points in determining if crowdfunding is a good fit for your campaign: 1. Is the value proposition immediately clear when someone sees it? 2. Does it solve a specific need rather…

How to Choose a Crowdfunding Platform There are many platforms available for crowdfunding. Consider these points in choosing one for your fundraise: Set your fundraising goals so you know how much money you need to raise. Do you want a general platform with broad coverage or a niche platform with…

More Mistakes in Crowdfunding Campaigns  Fundraising requires preparation and execution.  Avoid these additional mistakes in running your crowdfunding campaign: Not building your crowd before launching your campaign. It’s important to identify your crowd and raise awareness about your upcoming campaign. Not developing relationships with influencers and networkers who can extend…

Mistakes in Crowdfunding Campaigns  Fundraising requires preparation and execution.  Avoid these mistakes in running your crowdfunding campaign: Not understanding the rules and regulations around crowdfunding, including what you can and cannot do. Launching without market validation or product validation.   You must prove to the investor that customers will pay for…

Benefits of Crowdfunding Crowdfunding brings many benefits to the startup raising funding. Here are some key points to note: It gives the startup a whole new network of potential investors to pursue. Instead of raising only from accredited investors, crowdfunding raises from everyone. It gives the startup a way to…

Best Practices for Crowdfunding Campaigns In running an equity crowdfunding campaign, include these best practices: 1. Tell a story — show how you came up with the idea for the product and how customers and partners validate it. 2. Prepare your investor network — build a list of potential investors…

Key Components of a Crowdfunding Campaign There are several key components of a crowdfunding campaign. Consider how to include these in your fundraise: Goals — set goals for the campaign including mailers sent, investors contacted, and funds raised. Draw from the experience of other crowdfunders to set realistic goals. Platforms…

How to Set Your Crowdfunding Goal In setting your crowdfunding goal, create a list of needs for growing your business. From this list, create an overall fundraise goal.  Break the goal into three stages. Set the first stage relatively low, as the initial funding is the most difficult. Focus on…

Key Elements of a Crowdfunding Campaign Successful crowdfunding campaigns share several key elements. Here are some key points to include in your fundraise campaign: Clear value proposition — make clear what your product does and the value it brings. Story — tell what problem it solves and the background on…

What Is Crowdfunding? Crowdfunding refers to fundraising in which you can raise funding from anyone and not just accredited investors. Typically, these investors fund early-stage companies in various ways. Here’s a list of the different types of crowdfunding: 1. Equity-based crowdfunding — the investor receives an ownership stake in the…

Mistakes to Avoid in Financial Modeling Your financial model can be used not only for fundraising, but also for running your startup. Avoid these mistakes in setting up your financial model: Tying your revenue to a factor that doesn’t actually drive revenue. Figure out what actually drives sales and build…

Back of the Envelope Financial Model In setting up a fundraising plan at a high level, you set a revenue target five years out.  You then draw a line from today to that five-year mark.  Your fundraise and hiring plan will come from that. To calculate this quick and dirty…

How to Show Financials in a Pitch Deck The financial projection is a key element in the presentation to investors. Many founders cut and paste cells from the financial model spreadsheet into a slide. This renders the information unreadable as the spreadsheet doesn’t fit with the presentation format. To show…

Assumptions and Drivers in the Financial Model In building out your financial model, make explicit the assumptions you are using and identify the drivers in your business. Create a tab on the spreadsheet for assumptions and drivers for the investor to review. As you build out the revenue forecast, capture…

How Investors Use the Financial Model Investors use the financial model to understand not only the business, but also to learn about the founder and their skills.  Here are some key points investors look for: 1. Salaries — investors look to see how well the team is compensated and if…

Characteristics of a Good Financial Model The purpose of the financial model is not to predict the future with great accuracy but rather to understand the business and how it works. Here are some characteristics of a good financial model: The model shows what drives the business, such as leads…

Best Practices for Building a Financial Model Here are some best practices in building a financial model for your startup. Consider setting up the model to use for managing the business as well as the fundraise. Design the layout so you can test assumptions and scenarios. Capture your assumptions into…

Using Your Financial Model in a Pitch The financial model is a key component of your pitch. Use key financial numbers from the model to tell the story of how your business can scale up. Here are the steps: Start with your unit economics to show the business works. Show…

How to Use Your Financial Model After building your financial model, you can use it in several ways. Here is a list of use cases: Raising funding for the business by determining how much you need to raise and when. Generate financial forecasts and projections for managing the business. Project…

What to Include in Your Financial Model In building your financial model, make sure you include the following: 1. Revenue projections — your estimate of revenue from all sources. 2. Cost of Goods sold — your estimate of how much it will cost to build and deliver the product or…

How to Build a Bottoms-up Financial Model There are two approaches to building a financial model: top-down and bottoms-up. The bottoms-up approach uses specific data from your financials, such as historical revenue, specific expenses, working capital, etc. You apply assumptions to the historical numbers to build out the projections. To…

How to Build a Top-Down Financial Model There are two approaches to building a financial model: top-down and bottoms-up. In general, you should use a bottoms-up approach for preparing the financial projections, which will be more detailed. To build a top-down financial model, consider the following: Start with the size…

Benefits of a Financial Model Many startups build a financial model to show the investors and then leave it alone ’til it’s out of date and no longer useful. The benefit of an up-to-date financial model is that it can actually help you make management decisions. Here are several ways…

How to Build a Financial Model It’s best to build your own financial model so you understand it thoroughly. Here are the steps to build your financial model: Define the goal for the model.   Figure out how you will use it and what decisions you need to make. This will…

Why Build a Financial Model? In building a startup, the financial model is a key step in validating the viability of the business. Templates can educate on what to include and how to format, but it’s best to start from scratch. Every founder should build their own financial model at…

Founder Business Skills Required In starting a company, there are key skills required of the founder: Here is a list of basic skills: Team building — the founder must find a co-founder, build a board, and make the initial hires. Leadership — the founder must set the vision of the…

Metrics for B2B SaaS Here are the key metrics for B2B SaaS startups: Committed Annual Recurring Revenue (CARR) – this shows the overall health of the business as it includes new users as well as churn. To calculate, take the current ARR and add new bookings and upsells, and subtract…

Metrics Investors Use Investors also use metrics. Here’s a list of key metrics investors focus on: Annual Recurring Revenue (ARR) Growth – the overall growth rate of the revenue is a key factor. Month-over-month growth demonstrates product-market fit. Magic number – shows how sales and marketing spend drives revenue. To…

Your Top 3 Metrics  There are many metrics you can use for your startup. Focus on these top three metrics for your startup at each stage: For pre-seed, focus on qualitative activities such as customer interviews and community development. Track the number of calls made, the number of interviews completed,…

Efficiency and Predictability Metrics In addition to growth, there is efficiency to measure. This is important to consider as you grow your business. Here are some key metrics to use: Magic number – shows how many revenue dollars your sales and marketing dollars generate. To calculate, take current quarter revenues…

Metrics for a Downturn Economy In a downturn economy, metrics can help you make decisions about your business. Here are some key metrics to consider: Net burn rate – measures the actual cash lost in a single month.  To calculate, subtract the total revenue from the total amount of money…

Segment Your Data In running metrics, it’s important to segment your data as you grow. Segmentation helps identify the factors driving growth. Here is a list of ways to segment your data: 1. Location – the geographic location of the customer such as city, state, region, or country. 2. Industry…

Meaningless Metrics   Some metrics are actually meaningless and tell you little about the business. Metrics should demonstrate customer interest and satisfaction through commitment of time or dollars. Here’s a list of metrics to avoid: Number of downloads – by itself, it doesn’t show the level of interest or progress. A…

Marketplace Metrics  Here are the key metrics for marketplace startups: Match rate – the rate at which buyers and sellers engage with each other. To calculate, take the number of transactions in which there is a successful match and divide by the total number of attempted transactions. Time to match…

Customer Traction Metrics In raising funding, customer traction is a key focus point. Here are the metrics for measuring your traction: Customer acquisition – this includes all sources of leads such as website, email, social media, and referrals, as well conversion of leads to customers. You can look at these…

Challenges With North Star Metrics The North Star Metric seeks to capture the essence of a business in just one metric. It makes decision-making easier. Anything that doesn’t foster that metric is deprioritized. It does change over time as the company’s priorities change especially with growth. It’s not always a…

Finding Your North Star Metric The North Star Metric is the one metric that drives the growth of the core business. Founders use it to focus the company around a common goal. Some startups focus on signups, others focus on retention, and still, others focus on engagement. If you don’t…

Operational Metrics An efficient operation is one key to a startup’s success. Here are operational metrics you can use to check your startup: Basic efficiency – measures the overall efficiency of the business.   To calculate, take operating expenses divided by the revenues.   The smaller the number, the more efficient the…

Product Metrics The product is the core focus of the early-stage company. Here are two key metrics for understanding the performance of your product: The Heart Metric measures the quality of the user experience with the product. Here are the components of it: 1. Happiness – measures user satisfaction and…

Scale-Stage Metrics After the growth phase comes the scale phase in which you ramp up the business. Here are the key metrics to consider at the scale stage: 1. Break-even per customer – this shows how many days until the new customer turns profitable. This is a key factor if…

Growth-Stage Metrics Once you have product-market fit and start seeing growth, consider these metrics for your business: 1. Activation rate – the percentage of users achieving some step in activating your product. This helps you determine where users are dropping off. 2. Active users – the total number of users…

Startup Customer Success Metrics Once you have customers, the next step is to measure their success with your product. Here are some key metrics to use: Net Promoter Score – also referred to as NPS, this metric measures how loyal the customers are to the company. The metric asks the…

Seed-Stage Metrics Seed-stage startups have a few users trying out a beta product. The startup is working on the go-to-market strategy and focusing on customer acquisition. Key metrics to use are monthly unique users, monthly new leads, customer acquisition rate, and churn rate. This measures basic customer acquisition. To measure…

Start With Your Key Metric There are many metrics you can use to guide your startup. In the growth stage, start with your key metric that captures what drives growth. You can either focus on the total number of users or look at the total number of actions the user…

Unit Economics In the early days of a startup, the revenue is small. Instead of focusing on the absolute size of the revenue, focus on the unit economics of the business. Unit economics shows your business model on a per-unit basis. Measure the cost of acquiring each customer and the…

Pre-seed Metrics At the pre-seed stage, startups should focus their attention on engagement and referrals. Track how many visitors you can draw to your website. See how many of those visitors sign up for a trial.   The conversion rate is more important than the absolute number. See how many referrals…

Metrics by Stage of Startup Startups move through stages from pre-seed to seed to growth to scale. The metrics you apply should adjust to the stage of the company. Here’s a list of metrics by stage: Pre-seed – when you have an idea, use qualitative metrics and focus on basic…

Metrics by Stage of Life Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Startups go through three stages of life: product, growth, and operations. In the first stage, the startup focuses on the product. The objective is to…

Metrics by Startup Objective A startup’s objective changes as it moves from early to later stages. Here’s a list of metrics by stage objective: In the earliest stages of the startup, look for conversions.   Basic validation is important to prove the market wants the product. This exercise will teach you…

3X in 3 Terms I analyzed the results of several angel networks and found that 65% of the investments after three years were still in business but were no longer on the venture track.  In most cases, they were growing businesses but were not going to be bought out for…

Startup Success Rates The early-stage failure rate of startups is quite high. Out of 100 startups, only 40% go to the next level at Series A. Only 22% of startups reach Series B. Only 15% of startups reach Series C. Only 8% of startups reach Series D. As for the…

Payback Plans Not every funded startup continues on the venture path to a high payoff from the sale of the business.  For those startups, investors using an early-exit term sheet can find a path out of the deal. There are several options for the startup to pay back the investors….

Redemption Strategies In an early-exit term sheet, the investors have the right to redeem their stake in the company before an acquisition. There are several redemption exercise strategies. The first strategy is to recover the principal investment.   This makes the investor whole and now lets them play with “house money”….

Key to Facilitation Is Operational Involvement In managing an early-exit term sheet, it’s important to facilitate the ongoing information rights due to the investors. Most term sheets provide rights to the company’s financial statements, including the income statement and balance sheet as well as the cap table. This duty is…

Redemption Facilitation Process In an early-exit term sheet, it’s important to have a redemption facilitation process. This includes the steps for setting up the bank accounts, capturing the investor’s interest, providing payouts, and investor updates. The process also tracks escrow of repayment funds and later, revenue share payments to complete…

What Is a Cap Table? In raising funding, investors will ask for a cap table. Cap Table stands for Capitalization Table and is a document that tracks the capital structure of the company. In essence, it shows who owns how much of the company’s equity. So, a company that has…