Startup Funding Espresso -- How to Show Traction When You Are Pre-Revenue
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. If you are pre-revenue, you can show traction with your startup. We\u2019ll define traction as activity with customers, albeit without revenue. Show customer engagement at all phases, even before you have a product. You should have customers coaching you on what product to build. First, when communicating with investors, always include customers in your discussions. Never engage an investor meeting, email, or conference call without new info about your customer and always mention it. If you are pre-revenue, you can still talk about the\xa0prospective customers you are working with\xa0to build your product and what they are saying.\xa0 The customer problem is the most important thing because it shows you are close to the source of revenue and you are working towards obtaining it. Be able to name the customers, both the company and your contact. Never talk about the customers as a general group with vague and fuzzy references. Talk specifically about the problem they want to solve and how much it is costing them. Next, show how you're building your product to solve the customer's problem. Discuss pilots, beta tests, MVP usage, and how the customers are engaging.\xa0 Once you have a few customers closed, you have enough information to start building the Unit Economics story. Show the cost of acquiring those customers, qualifying them, and then closing them and how it\u2019s a profitable business.\xa0 Next, place those customers in a sales funnel to show prospects moving through the funnel.\xa0 Place upcoming prospects at the top of the funnel to show more are on their way. You now have\xa0a repeatable, predictable process.\xa0 The secret here is that most investors don't look for big revenue, they look for repeatable revenue. In your investor updates, show additional customers coming into the funnel and moving through it.\xa0 Highlight that the cost and timeframes are the same, emphasizing it\u2019s a repeatable process and you\u2019re just \u201cturning the crank.\u201d If you've decided you're not going to talk with customers until the product is complete, then you may want to rethink that strategy.\xa0 Involve customers from the start and get their help on it and ALWAYS be talking about those interactions with your investors. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let\u2019s go startup something today.-----For more episodes from Investor Connect, please visit the site at: Check out our other podcasts here: For Investors check out: For Startups check out: For eGuides check out: For upcoming Events, check out For Feedback please contact info@tencapital.group