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#datapointlive
How Best in Class Companies Are
Using Data to Win Investor
Confidence (at Any Growth Stage)
Stephanie Palme...
#DPL15 | @stephpalmeri
Bio
● Leads deals in next-generation commerce &
marketplaces, mobile, edtech, consumer health,
and ...
#DPL15 | @stephpalmeri
SoftTech VC
● 3 investors
● 4 Funds (I, II, III, IV)
● $85 M current fund, $155M under management
●...
#DPL15 | @stephpalmeri
Investment criteria
● 45-50 seed deals over 3 years
● $500K to $1M+ per initial investments
● Rough...
#DPL15 | @stephpalmeri
Representative investments
#DPL15 | @stephpalmeri
The Current State of Fundraising
#DPL15 | @stephpalmeri
Stages of fundraising
Seed
Product/
market fit
Series A
Refine sales
& marketing
Series B
Scale
#DPL15 | @stephpalmeri
The goals of a VC
●
Deliver profit to investors
●
Always on the lookout for outsized returns
●
80/2...
#DPL15 | @stephpalmeri
A typical year
Of about 2000 opportunities...
●
~20% result in a review/screening/meeting
●
~2.5% g...
#DPL15 | @stephpalmeri
SoftTech VC’s “Three Asses” Rule
#DPL15 | @stephpalmeri
The Old World (2013)
Raise
$1M
Raise
Series A
$1M ARR in 12
months
6 months to raise
your series A
...
#DPL15 | @stephpalmeri
Increased
availability of
seed capital
More $$
going
after each
deal
companies
raise more
$$, round...
#DPL15 | @stephpalmeri
The current environment
●
Flywheel is moving
rapidly
●
A $1M round is 50% less
than the round your
...
#DPL15 | @stephpalmeri
Seed is the new A
#DPL15 | @stephpalmeri
A rounds are also getting bigger
#DPL15 | @stephpalmeri
What this means for you
●
You have more competitors, and they can hire more
people
○ move faster on...
#DPL15 | @stephpalmeri
The New World: 2015
Raise
$1M
Raise
Series A
$1M ARR in 12
months
6 months to raise
your series A
1...
#DPL15 | @stephpalmeri
Your options
●
Raise a bridge
●
Cobble together a round of investors you
might be less likely to ta...
#DPL15 | @stephpalmeri
How the Smartest Founders are
Navigating This Landscape
#DPL15 | @stephpalmeri
When data matters
UnicornsStrongBottom 1/3 Middle 1/3
$ $$$$
#DPL15 | @stephpalmeri
When data matters
UnicornsStrongBottom 1/3
Data may help you
improve your company’s
performance but...
#DPL15 | @stephpalmeri
When data matters
UnicornsStrongBottom 1/3 Middle 1/3
How you leverage data
may move your
company h...
#DPL15 | @stephpalmeri
When data matters
UnicornsStrong
Effective use of
data will help you
get the deal done
Bottom 1/3 M...
#DPL15 | @stephpalmeri
When data matters
UnicornsStrong
Data will
help you
maximize
valuation
Bottom 1/3 Middle 1/3
$ $$$$
#DPL15 | @stephpalmeri
Things that matter
●
Predictability
●
Momentum/ Positive Trendlines
●
Healthy Cohorts
●
Negative Ch...
#DPL15 | @stephpalmeri
What are the smartest founders doing?
Using data to show a clear path to growth.
Give investors con...
#DPL15 | @stephpalmeri
SaaS tools companies are using to
make better decisions with data
#DPL15 | @stephpalmeri
Using Data to Speak the VC
Language
#DPL15 | @stephpalmeri
Company 1: using cohort analysis to
demonstrate path to growth
●
Early-stage SaaS company
●
Shiftin...
#DPL15 | @stephpalmeri
Company 2: funnel report card
●
EdTech company
●
Build a funnel report card to
review:
○ Acquisitio...
#DPL15 | @stephpalmeri
Company 3: identifying your unique
metrics
●
P2P Marketplace
●
Strong social component
●
Insights:
...
#DPL15 | @stephpalmeri
What these founders have in common
They’re using data to tell a compelling
story about a clear and ...
#DPL15 | @stephpalmeri
How you can do this
Acquisition Activation
Retention/
Engagement
#DPL15 | @stephpalmeri
● CAC: Blended & Paid
○ $$ spent across your
channels
● LTV to CAC ratios
● Funnel-specific metrics...
#DPL15 | @stephpalmeri
● Identify key
behaviors/milestones
● # Active users (define!)
● MoM growth/CMGR
● Cohort analysis
...
#DPL15 | @stephpalmeri
● MAU/WAU/DAU
● Social: likes, shares, etc.
● Usage frequency and duration
● Growth in ARPU
● Repea...
#DPL15 | @stephpalmeri
5 Tips for Using Data to Show the
Path to Growth
#DPL15 | @stephpalmeri
1. Guide the conversation
Size of your business:
○ GMV
○ Revenue
○ Bookings
Growth of your business...
#DPL15 | @stephpalmeri
2. Help them focus
Organize the data, conversation, etc. to help
investors focus on what matters mo...
#DPL15 | @stephpalmeri
3. Give them access
●
Real-time dashboards
●
Create an investor-
appropriate view
●
Prevent surpris...
#DPL15 | @stephpalmeri
4. Avoid restatements, get answers
●
Know the major inputs to your “polished” metrics
●
Prefer “I’l...
#DPL15 | @stephpalmeri
5. Remember metrics aren’t static
●
Good metrics aren’t just about raising money
●
Metrics are for ...
#DPL15 | @stephpalmeri
Thank You!
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How Best in Class Companies Are Using Data to Win Investor Confidence (at Any Growth Stage) - Stephanie Palmeri, Principal at SoftTech VC

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Keynote by Stephanie Palmeri, Principal at SoftTech VC, at Data Point Live, San Francisco, 10/1/2015

Published in: Data & Analytics
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How Best in Class Companies Are Using Data to Win Investor Confidence (at Any Growth Stage) - Stephanie Palmeri, Principal at SoftTech VC

  1. 1. #datapointlive How Best in Class Companies Are Using Data to Win Investor Confidence (at Any Growth Stage) Stephanie Palmeri, Principal, SoftTech VC
  2. 2. #DPL15 | @stephpalmeri Bio ● Leads deals in next-generation commerce & marketplaces, mobile, edtech, consumer health, and SaaS startups ● Before moving to Silicon Valley from NYC in 2011, spent a decade working at the intersection of marketing and technology for startups and seed funds/incubators (like Lot18 & NYC Seed) and large corporations (Accenture, Estee Lauder, SAP AG)
  3. 3. #DPL15 | @stephpalmeri SoftTech VC ● 3 investors ● 4 Funds (I, II, III, IV) ● $85 M current fund, $155M under management ● 170+ startups funded ● $2.25 B in follow-ons ● $2.5 B in M&A considerations ● $8.0 B in 1st IPO
  4. 4. #DPL15 | @stephpalmeri Investment criteria ● 45-50 seed deals over 3 years ● $500K to $1M+ per initial investments ● Roughly 45-50 new investments per fund, plus reserves for “follow-ons” in Series A and Series B ● Geos: SF/SV, NYC, SoCal, Toronto ● Target ownership: 7 to 10% ● Always syndicating with peer micro-VCs and angels
  5. 5. #DPL15 | @stephpalmeri Representative investments
  6. 6. #DPL15 | @stephpalmeri The Current State of Fundraising
  7. 7. #DPL15 | @stephpalmeri Stages of fundraising Seed Product/ market fit Series A Refine sales & marketing Series B Scale
  8. 8. #DPL15 | @stephpalmeri The goals of a VC ● Deliver profit to investors ● Always on the lookout for outsized returns ● 80/20 Rule or ⅓ - ⅓ - ⅓
  9. 9. #DPL15 | @stephpalmeri A typical year Of about 2000 opportunities... ● ~20% result in a review/screening/meeting ● ~2.5% get through to due diligence ● <1% (~0.75%) result in an investment
  10. 10. #DPL15 | @stephpalmeri SoftTech VC’s “Three Asses” Rule
  11. 11. #DPL15 | @stephpalmeri The Old World (2013) Raise $1M Raise Series A $1M ARR in 12 months 6 months to raise your series A 18 month runway
  12. 12. #DPL15 | @stephpalmeri Increased availability of seed capital More $$ going after each deal companies raise more $$, round sizes increase surplus of capital means more companies enter the market more investors and dollars to support increased deals The New World
  13. 13. #DPL15 | @stephpalmeri The current environment ● Flywheel is moving rapidly ● A $1M round is 50% less than the round your biggest competitor raises 6 months later ● The bar for a Series A rises
  14. 14. #DPL15 | @stephpalmeri Seed is the new A
  15. 15. #DPL15 | @stephpalmeri A rounds are also getting bigger
  16. 16. #DPL15 | @stephpalmeri What this means for you ● You have more competitors, and they can hire more people ○ move faster on product ○ spend more on sales & market efforts ● You have more competition for investor attention ○ more companies looking for funding ○ more pressure on investor time ● The bar for Series A gets raised ○ It’s no longer $1M ARR, it’s now $2-3M ARR
  17. 17. #DPL15 | @stephpalmeri The New World: 2015 Raise $1M Raise Series A $1M ARR in 12 months 6 months to raise your series A 18 month runway Raise $2M Raise Series A $2-3M ARR in 12-18 months 6 months to raise your series A 18-24 month runway
  18. 18. #DPL15 | @stephpalmeri Your options ● Raise a bridge ● Cobble together a round of investors you might be less likely to take in “good times” ● Sell early
  19. 19. #DPL15 | @stephpalmeri How the Smartest Founders are Navigating This Landscape
  20. 20. #DPL15 | @stephpalmeri When data matters UnicornsStrongBottom 1/3 Middle 1/3 $ $$$$
  21. 21. #DPL15 | @stephpalmeri When data matters UnicornsStrongBottom 1/3 Data may help you improve your company’s performance but will not help raise $$ Middle 1/3 $ $$$$
  22. 22. #DPL15 | @stephpalmeri When data matters UnicornsStrongBottom 1/3 Middle 1/3 How you leverage data may move your company here or here $ $$$$
  23. 23. #DPL15 | @stephpalmeri When data matters UnicornsStrong Effective use of data will help you get the deal done Bottom 1/3 Middle 1/3 $ $$$$
  24. 24. #DPL15 | @stephpalmeri When data matters UnicornsStrong Data will help you maximize valuation Bottom 1/3 Middle 1/3 $ $$$$
  25. 25. #DPL15 | @stephpalmeri Things that matter ● Predictability ● Momentum/ Positive Trendlines ● Healthy Cohorts ● Negative Churn (for SaaS) / Retention ● Expansion ● Repeat transactions ● Positive LTV (lifetime spend - CAC)
  26. 26. #DPL15 | @stephpalmeri What are the smartest founders doing? Using data to show a clear path to growth. Give investors confidence about their $$$ Series A Funding
  27. 27. #DPL15 | @stephpalmeri SaaS tools companies are using to make better decisions with data
  28. 28. #DPL15 | @stephpalmeri Using Data to Speak the VC Language
  29. 29. #DPL15 | @stephpalmeri Company 1: using cohort analysis to demonstrate path to growth ● Early-stage SaaS company ● Shifting from SMB to Corporate market ● Leverage cohort data to demonstrate greater ARPU plus long-term (non- transactional) value Acquisition Retention/ Engagement
  30. 30. #DPL15 | @stephpalmeri Company 2: funnel report card ● EdTech company ● Build a funnel report card to review: ○ Acquisition ○ Activation ○ Retention ○ Virality ● Identify critical actions & timing ● Drive key product and marketing initiatives Retention/ Engagement Activation
  31. 31. #DPL15 | @stephpalmeri Company 3: identifying your unique metrics ● P2P Marketplace ● Strong social component ● Insights: ○ Listers Need Love ○ Buyer/Seller is Power ○ Network Effects!!! Social User Lister Seller Buyer/ Seller Buyer Buyer/ Lister Retention/ Engagement Activation
  32. 32. #DPL15 | @stephpalmeri What these founders have in common They’re using data to tell a compelling story about a clear and sustainable path to growth, informing product and marketing decisions along the way.
  33. 33. #DPL15 | @stephpalmeri How you can do this Acquisition Activation Retention/ Engagement
  34. 34. #DPL15 | @stephpalmeri ● CAC: Blended & Paid ○ $$ spent across your channels ● LTV to CAC ratios ● Funnel-specific metrics: ○ Installs -> Account -> Active ○ Free Trial -> Paid Acquisition
  35. 35. #DPL15 | @stephpalmeri ● Identify key behaviors/milestones ● # Active users (define!) ● MoM growth/CMGR ● Cohort analysis ● Network effects Activation
  36. 36. #DPL15 | @stephpalmeri ● MAU/WAU/DAU ● Social: likes, shares, etc. ● Usage frequency and duration ● Growth in ARPU ● Repeat purchasing ● Expansion ● Sell-Thru/Inventory Turn ● Churn ($, Customers, Net $) Retention/ Engagement
  37. 37. #DPL15 | @stephpalmeri 5 Tips for Using Data to Show the Path to Growth
  38. 38. #DPL15 | @stephpalmeri 1. Guide the conversation Size of your business: ○ GMV ○ Revenue ○ Bookings Growth of your business: ○ MoM growth/ CMGR ○ Cohort dynamics ○ Network effects
  39. 39. #DPL15 | @stephpalmeri 2. Help them focus Organize the data, conversation, etc. to help investors focus on what matters most ● Use standard industry terminology ● Be clear on your definitions
  40. 40. #DPL15 | @stephpalmeri 3. Give them access ● Real-time dashboards ● Create an investor- appropriate view ● Prevent surprises!
  41. 41. #DPL15 | @stephpalmeri 4. Avoid restatements, get answers ● Know the major inputs to your “polished” metrics ● Prefer “I’ll get back to you” to a guess ● Misstating metrics hurts credibility ● Be nimble in your ability to pull & discuss data
  42. 42. #DPL15 | @stephpalmeri 5. Remember metrics aren’t static ● Good metrics aren’t just about raising money ● Metrics are for founders, executives, and investors ○ To understand what’s working and what isn’t ○ To adjust operations accordingly ○ To use for board meetings, investor updates, management meetings, and pitches
  43. 43. #DPL15 | @stephpalmeri Thank You!

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