Word of mouth and other ‘free’ marketing channels often do not score well
My heart sinks when I talk to a startup founder who proudly declares to have a customer base that has grown to 1,000 people organic. Being sloppy and frugal are great traits to have as a startup, but your investors will want to see you know how to scale quickly when needed.
If all of your growth to date has been organic, you may not know how to accelerate the business. After all, you wouldn’t even have a benchmark for what it costs to acquire new customers.
You don’t know how much money to raise. At best, you come across as an inexperienced founder. At worst, it will torpedo fundraising altogether.
Startups usually raise money for at least one of three reasons: to hire a bigger and better team, to invest in development, or to scale growth. Your “question” slide outlines the milestones you need to achieve in order for the business to reach the next stage, and your business plan will indicate how much money you need to invest to reach those goals.
Without knowing how much it costs to acquire customers, you have no way of knowing how much money you need to grow the business, which means you don’t know how much money you need to raise. At best, you come across as an inexperienced founder. At worst, it will torpedo fundraising altogether.
But it doesn’t have to be that way. By thinking carefully about how you collect this data, you can prove to your investors that you know how to scale when the time comes.
