2014 KOTRA: Showing Traction to Investors

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Information about 2014 KOTRA: Showing Traction to Investors
Business & Mgmt

Published on March 17, 2014

Author: luxrco

Source: slideshare.net

Description

Based on the work of Brendan Baker and Martin Zwilling, This deck enumerates items to include in your pitch deck to help demonstrate traction to potential investors.

© 2014 Luxr Incorporated www.luxr.co Showing Traction To Investors Preparing Startups for a Brighter Future March 14, 2014 Janice Fraser Jason Fraser

© 2014 Luxr Incorporated www.luxr.co Follow Us @luxrco Hashtag #leankotra

© 2014 Luxr Incorporated www.luxr.co Martin Zwilling http://www.alleywatch.com/2013/06/10-keys-to-startup-traction-that- investors-look-for/ @StartupPro

© 2014 Luxr Incorporated www.luxr.co 10 things that demonstrate traction 1. Documented business/product plan (Business Model Canvas) 2. Some completed milestones 3. A well-rounded team 4. Qualified Advisors 5. Minimum product released and validating 6. Real Customers/Real Revenue 7. Registered IP 8. Letters of Intent or endorsements 9. Personal investment 10. Be a dedicated expert in your field (Know your stuff!)

© 2014 Luxr Incorporated www.luxr.co Brendan Baker http://www.quora.com/Brendan-Baker/Posts/Startups-How-to-Communicate- Traction-to-Investors @brendanbaker

© 2014 Luxr Incorporated www.luxr.co Traction = Strong Forward Momentum demonstrated by “quantified evidence of market demand for your product”

© 2014 Luxr Incorporated www.luxr.co 8 things you can do to improve your traction story & 2 things you should never do

© 2014 Luxr Incorporated www.luxr.co Each of these tips is about framing your story If, when you frame your story properly it’s still not convincing, then you have more work to do on the product.

© 2014 Luxr Incorporated www.luxr.co Tip 1: Compress your X-Axis Company founding (Aug 2010) Today Some Lots

© 2014 Luxr Incorporated www.luxr.co This looks slow. Company founding (Aug 2010) Today Some Lots

© 2014 Luxr Incorporated www.luxr.co Check that your start date is accurate. You want to demonstrate that growth happened quickly. Did you start in 2010 and now you have 5000 users? (125 users/month) Or did you start the company in 2010, but open to the public in late 2012 and now you have 5000 users? (333 users/month)

© 2014 Luxr Incorporated www.luxr.co The blue line shows growth from Launch. Company founding (Aug 2010) Today Public Beta Launch (Dec 2012) Today Some Lots

© 2014 Luxr Incorporated www.luxr.co That’s a lot more impressive. Some Lots Public Beta Launch (Dec 2012) Today

© 2014 Luxr Incorporated www.luxr.co Tip #2: Choose your X-Axis You can use all kinds of numbers for the X-Axis, to show traction: Time Product Iterations Market Releases Sales Cycles (academic terms, etc.) Etc.

© 2014 Luxr Incorporated www.luxr.co Iterations instead of time 1st release Some Lots 2nd release 3rd release

© 2014 Luxr Incorporated www.luxr.co Tip #3: Reduce Expectations Provide proper context for your numbers: Are you in a closed beta? Have you generated lots of interest with no investment? If numbers are low now, what compelling evidence do you have that they’ll go up quickly?

© 2014 Luxr Incorporated www.luxr.co Public Beta Launch (Dec 2012) Today Some Lots Tip #4: Choose your Y-Axis

© 2014 Luxr Incorporated www.luxr.co Public Beta Launch (Dec 2012) Today Some Lots R e v e n u e

© 2014 Luxr Incorporated www.luxr.co Public Beta Launch (Dec 2012) Today Some Lots P r o f i t

© 2014 Luxr Incorporated www.luxr.co Public Beta Launch (Dec 2012) Today Some Lots E n g a g e m e n t

© 2014 Luxr Incorporated www.luxr.co - Profitability - Revenue - Active users - Registered users - Engagement - Partnerships/clients - Traffic - Low CAC/High Lifetime Value (my own addition) Y-Axis options, in order of persuasiveness: Choose the one that shows your growth.

© 2014 Luxr Incorporated www.luxr.co Tip #5: Use Absolute and Growth numbers Absolute: We have X (number) now. Growth: We grew Y% per time period. An absolute number with no (or a low) growth number is dead.

© 2014 Luxr Incorporated www.luxr.co We have 5000 now. The growth rate is ______% per _______. This tells a story and lets your investor imagine the future. 18 month (absolute) (growth)

© 2014 Luxr Incorporated www.luxr.co Tip #6: For b2b, tell a story of a customer (NOT how much they love your product or how it changed their business.) How much has usage grown? What’s the future potential? (using numbers)

© 2014 Luxr Incorporated www.luxr.co Tip #7: Benchmark against a known competitor This can put growth into perspective. (Choose comparisons carefully.)

© 2014 Luxr Incorporated www.luxr.co Tip #8: Annotate a graph Easy way to demonstrate growth Combine with tips 1 and 2 with this to create powerful graphs. Annotation serves to compress the X-Axis by providing reference points. Annotation allows you to keep the X-Axis as time, while still breaking it up into meaningful segments.

© 2014 Luxr Incorporated www.luxr.co 0 250 500 750 1000 August September October November Private Beta (web only) Android & iOS Web Launch

© 2014 Luxr Incorporated www.luxr.co Do Not: Do not use testimonials. Do not use press mentions. Investors don’t care what people say about you. NO ONE cares what the press says about you.

© 2014 Luxr Incorporated www.luxr.co Instead: Name major clients. Use statements of support from major industry groups. Big name clients provide validation. Gartner, Consumer Reports, etc.

© 2014 Luxr Incorporated www.luxr.co - Profitability - Revenue - Active users - Registered users - Engagement - Partnerships/clients - Traffic - Low CAC/High Lifetime Value Which of your numbers are most likely to tell an effective growth story? Prompt:

© 2014 Luxr Incorporated www.luxr.co - Profitability - Revenue - Active users - Registered users - Engagement - Partnerships/clients - Traffic - Low CAC/High Lifetime Value Where could you get those numbers?

© 2014 Luxr Incorporated www.luxr.co Homework: Use the Baker tips to improve your traction slide. Use the Zwilling checklist to identify what else you need.

© 2014 Luxr Incorporated www.luxr.co Zwilling’s Checklist for Showing Traction Documented business/product plan (Business Model Canvas) Some completed milestones A well-rounded team Qualified Advisors Minimum product released and validating Real Customers/Real Revenue Registered IP Letters of Intent or endorsements Personal investment Be a dedicated expert in your field (Know your stuff!)

© 2014 Luxr Incorporated www.luxr.co Baker’s Checklist for Showing Traction Compress your X-Axis Choose your X-Axis (carefully). Reduce expectations (by setting appropriate context). Choose your Y-Axis. Use Absolute and Growth numbers. Tell a story of a customer (for B2B). Benchmark against a known competitor. Annotate a graph. DO NOT use testimonials. DO NOT use press mentions.

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