Early-stage companies pitching investors often have little revenue traction.

In place of traction, show how the business model performs on the unit economic level.

Calculate the cost of acquiring a customer and the expected lifetime value of that customer.

Show the ratio between the two and make a note of it.

Show how your business model is profitable at the unit economic level.

This will resonate with investors who seek working business models.

Discuss the variability of the costs and how the costs will scale with the business.

Make a note of the gross margins and the profit margins at the early stage.

Some investors judge the business based on the margins and the variability of costs.

This allows the startup to ride the economic waves of good times as well as bad times.

Show how the business is close to breakeven already.

Note how few customers it will take to reach break-even.

Show how the business is profitable at the very early stages.

Show the business model in unit economic terms when pitching to an investor.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.