Month: March 2013

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This post is by Tomasz Tunguz from Tomasz Tunguz

Click here to view on the original site: Original Post

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Once you have built your product and it’s in the market, there are only three things that matter: distribution (getting the product into users' hands), engagement (validating that you’ve built the right product and that users are using it), and monetization (making money from those engaged users). Some companies call this the 3 Rs: reach, retention and revenue. Whatever you call it, this is your strategy. At board meetings, I’ve started categorizing each portfolio company’s roadmap items into these three buckets.

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This post is by Tomasz Tunguz from Tomasz Tunguz

Click here to view on the original site: Original Post

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Once you have built your product and it’s in the market, there are only three things that matter: distribution (getting the product into users' hands), engagement (validating that you’ve built the right product and that users are using it), and monetization (making money from those engaged users). Some companies call this the 3 Rs: reach, retention and revenue. Whatever you call it, this is your strategy. At board meetings, I’ve started categorizing each portfolio company’s roadmap items into these three buckets. It’s a simplification that immediately reveals the priorities of the company at any stage. Is most of the product development focused on growth or new product features that drive engagement? How have those priorities changed over time? Where are most of our people allocated? Are these priorities the right ones given the stage of the company? Breaking strategy into these three parts makes it easy - you now have Continue reading "Your Startup’s Top 3 Priorities"

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This post is by Tomasz Tunguz from Tomasz Tunguz

Click here to view on the original site: Original Post

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Some of our companies started financing processes in earlier this quarter. At a strategy session with one of our companies, the team and I crafted the outline of the pitch deck. They asked me what questions a venture investor might ask in the initial meeting. Distilling the investment analysis into a small number of general questions is challenging because of the diversity of businesses we see but, I gave it a try and came up with the following questions I might ask a startup to answer in an initial meeting.

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This post is by Tomasz Tunguz from Tomasz Tunguz

Click here to view on the original site: Original Post

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Some of our companies started financing processes in earlier this quarter. At a strategy session with one of our companies, the team and I crafted the outline of the pitch deck. They asked me what questions a venture investor might ask in the initial meeting. Distilling the investment analysis into a small number of general questions is challenging because of the diversity of businesses we see but, I gave it a try and came up with the following questions I might ask a startup to answer in an initial meeting.

1. [Value prop] What is the problem and is it worth solving? Why is now the right time to solve it?
2. [Team] Does the team have the vision and the wherewithal to build this company?
3. [Go to market] What is the competitive angle (competitive barrier to entry and/or go-to-market) that will enable this company to succeed where others have tried and Continue reading "The 7 Questions A Startup Should Answer in their Fund Raising Pitch"

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This post is by Tomasz Tunguz from Tomasz Tunguz

Click here to view on the original site: Original Post

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Though the industry is called venture capital, the goal of a VC isn’t to maximize every risk. Instead, we try to understand all the risks a business might face and weigh those risks with the reward - the exit. Here are the major risks that I typically review when a startup pitches. Market timing risk - Is now the right time for the business? It’s often hard to evaluate this risk, but nevertheless, it’s an important consideration.

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This post is by Tomasz Tunguz from Tomasz Tunguz

Click here to view on the original site: Original Post

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Though the industry is called venture capital, the goal of a VC isn’t to maximize every risk. Instead, we try to understand all the risks a business might face and weigh those risks with the reward - the exit. Here are the major risks that I typically review when a startup pitches. Market timing risk - Is now the right time for the business? It’s often hard to evaluate this risk, but nevertheless, it’s an important consideration. There are many stories of people saying I invented Facebook before Facebook, which may very well be true. But the market just wasn’t yet ready for it. Business model risk - Is there a clear business model? Do the unit economics seem to work? If not, what are the assumptions required to achieve profitability? Market adoption risk - Are there strong competitive players in the market? What are the major barriers to entry? Continue reading "The 11 Risks VCs Evaluate"

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This post is by Tomasz Tunguz from Tomasz Tunguz

Click here to view on the original site: Original Post

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When deciding if to raise a venture round, it’s critical to ensure your venture investor shares the vision for the company: both the product roadmap and the financial goals of the company. Most founders never consider the impact on fund size on VC motivations. As long as there are enough reserves to invest as the company grows, a founder might think, that’s fine with me. But this is naive. Fund sizes dictate a VC’s strategy.

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This post is by Tomasz Tunguz from Tomasz Tunguz

Click here to view on the original site: Original Post

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When deciding if to raise a venture round, it’s critical to ensure your venture investor shares the vision for the company: both the product roadmap and the financial goals of the company. Most founders never consider the impact on fund size on VC motivations. As long as there are enough reserves to invest as the company grows, a founder might think, that’s fine with me. But this is naive. Fund sizes dictate a VC’s strategy. To achieve their target returns, a $50M fund and a $500M fund must pursue very different investment and management styles. Let’s take a look at the economics of two hypothetical funds, a $50M and a $500M fund. Assuming each fund seeks to return three times the capital invested in 10 years to provide a good return for investors, the total value of the portfolios must be $150M and $1,500M respectively. The funds have different target Continue reading "How to Align Founder and VC Incentives: Why Fund Size Matters"

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This post is by Tomasz Tunguz from Tomasz Tunguz

Click here to view on the original site: Original Post

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With the analytics tools today, it’s easy to measure hundreds if not thousands of different metrics for your business. Cutting through all the chaff to determine the most important or insightful metrics can be quite a challenge. Below are the ten metrics I’ve found to be most useful in board meetings. They answer the questions of how should a startup founder might measure the business at the highest level. You should have many more metrics than these, but I’ve highlighted the ones that I recommend presenting to your board and reviewing each week.

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This post is by Tomasz Tunguz from Tomasz Tunguz

Click here to view on the original site: Original Post

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With the analytics tools today, it’s easy to measure hundreds if not thousands of different metrics for your business. Cutting through all the chaff to determine the most important or insightful metrics can be quite a challenge. Below are the ten metrics I’ve found to be most useful in board meetings. They answer the questions of how should a startup founder might measure the business at the highest level. You should have many more metrics than these, but I’ve highlighted the ones that I recommend presenting to your board and reviewing each week.

Metrics Format

Clear data leads to productive conversations. To best understand a data point and its implications, we have to put it in context. I’ve found dividing top level data in three slides, one for company priority (Distribution, Engagement, Revenue) helps to set the right context. Within the slide, a table that shows the metric and compares Continue reading "Your Startup’s 10 Most Important Metrics"