When the recession hit, many VCs urged founders to cut their marketing costs. On the face of it, this is an effective way to extend runway while cutting costs.
After several months, we’ve learned that cutting marketing budgets can make early-stage startups healthier, but it’s also a great way for VCs to reduce burn rates across their portfolios.
As Rebecca Szkutak reports this week, more SaaS startups ignore this advice than follow it.
If someone gives you free business advice, it’s probably for their own benefit.
In business, if someone gives you advice, it is probably for their own benefit. That’s why I take investors at their word when most founders say they can’t accurately assess their total addressable market (TAM).
Most founders present a slide with three concentric circles: TAM on the outside, SAM (Serviceable Market) in the middle, and SOM (Serviceable Market) in the middle.
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Bill Reicher, partner and chief evangelist at Pegasus Tech Ventures, wrote: “Most investors will laugh (or cry) when they see this slide.”
Few investors invest based on how many billions they think they’ll make in year 8. Instead, founders need to demonstrate that they have a strategic plan and a deep understanding of future users.
“How many customers will you get this year? Next year? The year after?” asks Reicher. And just as importantly, “How much can you convert? How do you get them?”
Don’t spend too much time calculating future earnings or reading Gartner studies that seem authoritative for facts. Instead, build a bottom-up model that focuses on the size of the opportunity, not the market.
“Show investors how to build an increasingly happy customer base,” advises Reicher. “Don’t suggest that your focus is on gaining market share in a broad market.”
good weekend,
Walter Thompson
Editorial Manager, TechCrunch+
@your main actor
How to convert user data to the next pitch
Investors may enjoy listening to the founder’s well-rehearsed story, but sharing real customer data “can really raise the pitch deck,” said David Smith, vice president of data and analytics at TheVentureCity.
“Investors need to see that you’re not blinded by easy wins that can go up in smoke in a matter of weeks, but that you’re using solid data to build a sustainable company that will endure and grow over time.”
SaaS startups that ignored VC advice to cut sales and marketing fared better this year.
Image Credits: Andriy Onufriyenko (Opens in a new window) / Getty Images
Many VCs have advised founders to dial back their sales and marketing spending this year to maintain a runway. And as it turns out, many VCs have been giving the wrong advice.
According to data from Capchase, a fintech that provides unbiased capital to startups, “Companies that did not reduce their spending on sales and marketing were in better financial and growth shape in 2022 than they were when the market started to decline.” ” reports Rebecca Skutak.
Of the 500 companies surveyed, bootstrapped companies have seen the most growth, said Miguel Fernandez, founder and CEO of Capchase.
“What we’ve seen in this case and what’s really interesting is that the best companies have cut costs other than sales and marketing.”
Dear Sophie: My co-founder was a green card applicant and is now laid off. what now
Image Credits: Bryce Durbin / TechCrunch
Dear Sophie,
My co-worker and I both got fired from Big Tech last week and it’s the kick we need to get all in on our startup.
We are first time founders, but need an immigration sponsor to maintain our startup status.
Do we consider the O-1A within the 60-day grace period? thank you!
– Newby in Newark
Pitch Deck Teardown: Satellite’s $11.4M Series A Pitch Deck
Image Credits: Satellite (Opens in a new window)
Cell phone coverage is built to serve people, which is why satellites are launching nanosatellites to provide IoT connectivity to ocean floats and autonomous drones.
The company shared the 10 million euro series with TC+, which includes all 18 slides.
- Cover
- Problem: “90% of the world’s coverage has no cellular coverage.”
- group
- Solution: “To connect all NB-IOT devices from space with 5G standard”.
- Value Proposition: “Near Instant Communication”.
- Product: “Standard Protocol”.
- Why Us: “Satellite is the #1 Satellite Operator.”
- Market size
- Competition
- Business model
- Traction: “MNOs Engaged and Technical Integrations Underway”
- Go to Market: “Early Adopter Program”
- Middle slide
- advantage
- development
- NGO program
- Motto
- Conclusion
How much tax do you pay when you sell your company?
Image Credits: PM images (Opens in a new window) / Getty Images
Getting a startup off the ground is hard work, so asking founders to prepare for an acquisition might seem as silly as asking them to practice their Academy Awards speech in the bathroom mirror.
Still, if you’re ready to launch a startup, you need to be ready to sell.
Explaining TC+, Peyton Carr, managing director of Keystone Global Partners, provides a framework for calculating tax on exit and sets out the difference between short-term capital gains and long-term capital gains rates.
“As a founder, you need to plan your personal tax situation to optimize the opportunity presented to you.”
