In working with early stage companies, I focus them on the proof-points they want to nail, in time for the next inflection point of their business, often coinciding with a next series round of investment.
Why is this important? Proof–points are company deliverables that have to be completed in time for that inflection point, that next fundraising. They are as important as any other objectives you have set for your business. If you don’t achieve them, then you are not prepared for the next inflection point, convincing your investors to invest.
Ask yourself, “what do I want to be able to show my investors with case studies and proof-points so that there is no doubt about our capability?”
What do you want to prove?
Depending on the traction of the company, the proof-points that need to be reached vary but they typically fall along the lines of product development and rollout, customer/revenue traction, market penetration, organization and talent build-out.
For example, all too often I see startups and early stage companies focusing on revenue traction. In reality, the proof-points to be established for that next round of investors are likely to have more nuance than that.
• Prove that we can scale with multinational customer across markets
• Prove that sales channel can be x % of business
• Prove that product x can be upsold
• Prove that monetization targets (what we charge) can be met
• Prove retention of customers
set targets and ownership on your team for each proof-point and manage to them!
In the same manner, while talent acquisition and organizational depth are always on the mind of the early stage CEO, often they are not viewed as critical levers to be attained as part of making the case for new investment. Wrong. By the time you get to series A or B rounds, the scrutiny you received about your team in the seed round will pale in comparison. Investors are looking at the following proof-points:
o Are you organized for success?
o Do you have a solid team with skills, experience and hunger?
o Have you built key components of the organization that allow you to achieve this next phase of scale? (and can you show me your hiring plan once money comes in?)
Set your company plan across key deliverables/levers that must be achieved in order to attract that next round of investors. Consider these proof-points as important as any other deliverable and manage your business accordingly. For example, it might be better to grow 25% and prove customer up-selling with a few case studies versus 35% per month and not prove that.
Be laser-focused on your proof-point deliverables and you will be set up to win that next round.
