Wow – if you’ve been part of raising any round of venture capital you know how freaking awesome that feeling is that someone (any VC/Angel/Investor) is willing to bet on your idea and your team!
Champagne corks pop and celebrations are in order, for good reason!
97% of startups fail to raise capital – you’re already awesome on several startup levels! Drink in the victory you have attained and then next…?
The Venture Capitalist team than invested in you expects you to deliver on the strategic plan you sold them on.
Yesterday!
Let’s have a think about what your VC wants – outside of their investment in your amazing / awesome / market busting startup.
Burn Fast, Burn Bright!
VC Speak 101 (Internal Notes for LP’s only)
- We invested in XYZ, their plan will work or fail in the next 12/18 months which fits this stage of our 10-year VC fund (year 1-3 are usually initial investment rounds)
- Expectations are that they will need a top up in 12 months if their strategy hits. If not…
- They need to immediately start selling the hell out of XYZ yesterday – the clock is ticking and just like the sword of Damocles – we will cut them quickly if need be.
- At 12 months we should know if we need to write the investment off or starting to gather additional investors for a B round raise.
CEO Startup Up 101 Speak (Internal Notes only)
- VCs are our friend as long as we are doing well and fit within their 10 year investment fund cycle.
- We need to stay focused on delivering what we agreed upon. We need to execute on the plan our VC invested in. (see Walt Disney strategy map)
- Engage our VC team often as they can add value / help / make a positive impact. Watch out for VC partner speak– “you need to try” because it’s in “their portfolio” vs what works, saves you super important time!
- We absolutely have to sell / gain market share yesterday or we won’t be here in year two and there won’t be a B round raise.
Sounds scary, especially if you’re not familiar with the startup world.
Venture capital / investors want you to succeed – or they would not have put money into your business. They also know that startups have a historical 90%+ failure rate. And like the 100 other investments they made this year most (possibly your awesome XYZ) will fail and they are setup to quickly close your business down, sell any IP and move on – much faster than XYZ’s founders are likely willing to give up.
They know on average only 10 will reach year 3 and “maybe” 1 will pay for the entire fund – and make them look like VC Rock Stars!
So. It doesn’t take a brain surgeon to figure out as a startup CEO that sales and most importantly demonstrably repeatable sales or in VC speak MRR – (Monthly Recurring Revenue). Those initial sales post A round investment must take place in a hockey stick / rocket like trajectory.
They the key to a startup’s success and more importantly a ticket to the next B round raise and another celebration!
Lessons learned:
Startup CEO Keys to A round month 1
- To succeed the sales process must be awesome, repeatable, and sustainable. This is not the place to skimp on resources. Believer in your plan and execute. Burn Fast Burn Bright!
- The software to support sales success must be even better. Ditto – find a Sales Enablement partner(s) that will create a sales solution that fits your sales best practice process (the one your VC / you bet the ranch on).
- Time is money and if a prospective sales enablement partner can’t get your CRM up and running in weeks (not months) exit stage left – find a better / faster implementation partner(s).
- Your first Sales Super Star hires must fit the right SDR persona to burn bright out of the gate. The best sales reps know how much they are worth and bring their own “book of business” to a startup.
- Live and breathe sales until this part of your startup is right and your CRM shows a giant funnel with crazy growth projections. Every other part of your business can wait a little bit until the sales process has been proven. After that everything else will seem like smooth sailing to your B round raise.
By focusing on getting the sales process / systems / solutions part of a startup right as soon as funding arrives, startup CEO’s will succeed or at least understand where they need to change to get to the next round and keep the doors open!
