Importance of Metrics for Raising Funds
“We will raise funds and grow” – that’s what we too commonly hear. I just wanted to post few lines on what we often hear from business Founders. Private equity market is partly driven by the biggest fundraisings. These ones obviously correlate the amounts raised and the level of success. Some of entrepreneurs unconsciously consider that fresh fund will trigger their success. Their market – particularly adopters & customers – immediately reminds reality.
“Why do you need money?” As partners, we always come back to reality and breakdown the directors’ expectations. How much would cost you to execute this hypothesis? The Lean StartUp methodology obviously remains strategic for managing your cash. To be noticed that the more you bootstrap the less equity you let. Obviously time might devaluate your project and this post does not refer to getting a leadership position on a particular market.
“What do your customers say?” We always prefer hearing from customers (or early adopters) and analysing their uses rather than market research reports which burn both months and cash. Before pretending raising funds, please build, interact and analyse your database. This is your value, decision maker and key argument for pretending raising funds. Your metrics will define the right direction to explore, develop and market.
The less you will explain your business model to potential investors the better it is. Indeed you will save time which means a quicker execution and higher probability to succeed.
Once your business model becomes obvious for both you and your potential investors, the objectives are met because business matters more than valuation or administrative negotiations.