Revenue models: How-to convince VC
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Revenue models: How-to convince VC



Founder Institute 2014 Spring session

Founder Institute 2014 Spring session



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  • Views a venture as a set of assumptions that must be learned about, rather than a plan to be proven. <br /> It is positioned as a six step process: <br /> Differentiation between primary and derivative assumptions with focus on extracting and understanding primary assumptions <br /> Early construction of a business model that allows calculation of the impact of the primary assumptions on derivative assumptions such as sales or revenue <br /> Assignment of uncertainty ranges to primary assumptions <br /> Identification of the critical assumptions by determining the impact of their uncertainty ranges on the net present value of the venture <br /> Selection of the next venture milestone based on a test program that results in maximum reduction of uncertainty at least cost in least time for the most critical assumptions <br />
  • Document all assumptions that you are making as you go through thinking about venture deliverables <br /> <br /> Focus on the most critical assumptions. <br /> Some assumptions are more critical than others, due to their close association with the key production- or consumption-chain, hence driving the cost, revenue or business risk of the venture <br /> <br /> Create management interventions (« checkpoints ») to deliberately structure the systematic testing of critical assumptions as the plan unfolds <br /> <br /> Link the critical assumptions and the checkpoints. <br /> The goal is to have a chart that will help you identify which critical assumptions will be tested at which checkpoint – bearing in mind that many critical assumptions might be tested more than once <br />

Revenue models: How-to convince VC Revenue models: How-to convince VC Presentation Transcript

  • Revenue Models: How to convince VC Michael Demidov, T34Moscow
  • First amendments  User is a must  Value is king  Product as state of art Tim Brown Change by Design
  • No money, no woman?
  • No revenue, No VC?
  • Business model weird-do 2013
  • Typical revenue schemes Stable growth Hockey Stick step growth Growth to stability
  • Die is cast  Not understanding the revenue drivers  What are the leverage points of revenue build-up?  Underestimating time to generate revenues  Costs come before revenues  Underestimating costs  Leading to cash crunches and ultimate failure  Lack of comparables  VC’s check industry standards  Top-down versus bottom-up forecasting  How do you get to projected numbers?
  • Assumptions&illusions
  • Revenue VS profits
  • Q&A Michael Demidov