Product & Startup Builder

4 Things to Raise Capital

Added on by Chris Saad.

Reminded of this today. Also keep in mind that many successful b2b companies are now using consumer growth tactics and metrics.

If you're building & running a self-serve consumer app, you really only need to prove 4 things to raise capital and have a good exit

1. You can spend $x on acquiring a user and get $y in return. Where y is the Customer Life Time Value (LTV). It’s ok if Y is initially less than X (this is investing/subsidizing growth - see point 3).

2. The market your addressing is large enough such that your total revenue can become meaningfully large.

3. You have a clear and believable strategy to reduce the cost of X and increase the return of Y (This is essential if X is still greater than Y)

4. You have an IPO in your future and/or (more likely) you have a number of potential acquirers lined up - ideally you've started building relationships with them already.

Originally posted on Facebook