I have nothing against the investor class, but sitting in a room with several VCs while I try to sell them on my billion-dollar idea sounds very stressful.
When an investor inevitably asks founders about their valuation expectations, it is a trick question of the highest order. If the response is too high, it’s a red flag, whereas a lowball figure will undervalue the company.
“We’re letting the market price this round” is a confident reply, but it’s only appropriate if you’ve actually gathered substantial data points from other investors — and can fire back with a few questions of your own, says Evan Fisher, founder of Unicorn Capital.
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“If that’s all you say, you’re in trouble because it can also be interpreted as ‘we don’t have a clue’ or ‘we’ll take what we’re given,’” said Fisher.
Instead of going in cold, he advises founders to pre-pitch investors for their next round and use takeaways from those conversations to shape current valuations.
In the article, Fisher includes sample questions “you will want to ask every VC you speak with,” along with other tips that will help “when they pop the valuation question.”
A pitch is a business meeting, but on some level, it’s also a game where investors hold all the cards and always win. To level the playing field, founders need to think one move ahead.
Thanks for reading,
Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist
Twitter Space: Is tech media creating “charismatic” founders?
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Larger-than-life entrepreneurs are nothing new, but tech has taken that to the next level, often with an assist from news media.
On Tuesday, December 13 at 1:00 p.m. PT, Builders VC investor Andrew Chen will join me on a Twitter Space to discuss the role tech reporting plays in shaping ecosystems, narratives and expectations.
This should be a lively conversation, so please bring your comments.
The climate founders’ guide to the Inflation Reduction Act
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The Inflation Reduction Act goes well beyond bringing down costs for American consumers — Congress earmarked $369 billion to combat climate change, creating new opportunities and incentives for thousands of entrepreneurs.
In a detailed post that examines the IRA’s impact on green fintech, electrification, carbon capture and other areas, investor David Rusenko and Floodgate Fund principal Leeor Mushin share their “understanding of the regulatory ramifications of this monumental bill.”
To prepare for a downturn, build a three-case model
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Startups that develop case models are better equipped to deal with potential setbacks. Visualizing exactly how potential market shifts can impact your business is a great way to prepare for the unexpected.
A three-case model attempts to predict best-case, down-case and base-case scenarios, writes Matt Barbieri, partner-in-charge at accounting firm Wiss & Co.
“Typically, the base-case scenario falls between the extremes. For example, in financial modeling, you might say that Peloton experienced both its ‘best case’ and ‘down case’ scenarios within a year.”
In uncertain times, B2B sales teams must put value front and center
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In an era when companies are looking for places to shave SaaS spending, sales teams must focus on ROI and value, says Ketan Karkhanis, EVP and GM of Sales Cloud at Salesforce.
In a post for TC+, he shares tactics successful B2B sales teams use to coach prospects through the sales funnel while building relationships via personalized interactions.
“Many customers are feeling lost,” he writes. “They’re confused by economic volatility and overwhelmed by a deluge of information.”
“Serving as a coach who brings personalized, relevant information to the right stakeholders without pushing for a quick close is key to building trust.”
Pitch Deck Teardown: Rootine’s $10M Series A deck
Image Credits: Rootine (opens in a new window)
In 2018, TechCrunch reported that health and wellness startup Rootine was preparing to enter the U.S. market after racking up “1,500 paying customers in Europe.”
Four months ago, the company, which sells a $70/month subscription for multivitamins, announced that it raised a $10 million Series A.
If you’d like to read all 29 unreacted slides, click through for our latest pitch deck teardown.
Dear Sophie: How do tech layoffs impact PERM and the green card process?
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Dear Sophie,
I handle HR and immigration at our tech company. We filed a PERM for one of our team members about five months ago for her EB-2 green card, and we’re awaiting certification from the Labor Department. We’ve been gearing up to start PERM for another employee.
Will the layoffs in the tech industry affect the PERM process for EB-2 and EB-3 green cards? What will happen to my team members’ green cards if our company has to do layoffs?
— Pondering in People Ops
To win over investors, use growth as your differentiator
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Despite the doom and gloom, investors are still meeting founders as they look for places to park their money. Suave storytelling skills are good, but they’re not enough: Once you’re in the room where it happens, it’s critical to make the best use of everyone’s time.
To make investor buy-in more likely, Jon Attwell, leader of the Seedstars Growth Track, advises teams to create metric-oriented customer journey maps that detail “all the mini-processes that customers are put through and the pathways they are led down.”
Growth projections are nice, but showing investors concrete plans for onboarding and retention, fighting churn and addressing other growth factors will help demonstrate how well you understand your market.
“For investors, it’s a rare treat to see an obsession with the granular metrics of a customer journey,” writes Attwell.