This is The Friday VC Digest, a weekly newsletter send every Friday to strengthen your knowledge on the key points of deal screening and investment memos. These curated articles will offer some insights about assessing more in-depth a pitch deck and complete an investment memo.
I am Ange Michaël AHYI, I am already sharing articles every 2 weeks about tech & VC culture in Pause Curation (an example here). (I try to stay consistent, but it’s not easy for the moment... 😅)
📌 Need
“White Space” For Building A Marketplace: How To Find Your Competition’s Vulnerabilities
👨💻 Sarah Tavel
🏢 General Partner | Benchmark Capital | San Francisco
In less than 60 words: 3 ways to own a white space for an incoming consumer marketplace: 1- grow in a neglected niche; 2- redefine the smallest supply unit of your TAM and then re-expand or 3- target verticals with low NPS in large horizontal marketplaces
Why this article? See if the marketplace you screen would have the clairvoyance and/or the capacity to exploit a white space in its market.
📌 Team
Venture Capital Due diligence: The Management Team
👨💻 GoingVC Team
🏢 GoingVC | San Francisco
In less than 60 words: At the beginning, the startup needs 2 leaders: Product Marketing lead in first, and Demand Generation lead in second. Most startups take one people for these two jobs, but the cost of having two relevant people could be overweighed by the added value of their specific skills at their best.
Why this article? Know the choice of the head of marketing between these two priorities, know what it could miss in the equation and how the founding team will face this lack of skills
📌 Market
How to Analyse a Competitive Landscape: A Framework for VCs and Founders
👨💻 Omar Ismail
🏢 Associate | Rook Nest Ventures | London
In less than 60 words: There are three competition structures: 1- Winner Takes All: the ~80% market share winner has solid moats like global network effects; 2- Winner Takes Most: the top 10 hold the market and joining them need product differentiation; 3- Fragmented: everybody struggles for +20% shares and a relevant GTM strategy with low friction user acquisition is key.
Why this article? Determine the type of market where your startup is, and assess its comparative advantages.
📌 Finance
How Much Should Your Startup Spend on Customer Account Expansion?
👨💻 Tomasz Tunguz
🏢 Partner | Redpoint Ventures | San Francisco
In less than 60 words: At the beginning, the sales team is larger than upsell & customer success teams (more than 6x). All along with the MRR increasing, headcounts of the two teams will be equal. New biz / upsell headcount ratio, linked to MRR show that more the SaaS company evolves, more the upselling have to account.
Why this article? If you have access to historical financial data & headcounts, we will understand if the founders allocate people costs at the right place according to the MRR's progression and issues.
📌 Product
Hierarchy of Engagement, Expanded
👨💻 Sarah Tavel
🏢 General Partner | Benchmark Capital | San Francisco
In less than 60 words: Three layers of engagement to build a unicorn: 1- To grow engaging users accomplishing the core action of the product, linked to retention by features or roadmap optimization; 2- To retain users by improving the product based on users' data and nurturing high switching costs, and 3- Self-perpetuate the virtuous loops like network effects or re-engagement.
Why this article? Deduce where the startup's product is in terms of user engagement in using cohort performance
📌 Metrics
Consumer Subscription KPI Benchmarks: Retention, Engagement, and Conversion Rates
👨💻 Parsa Saljoughian
🏢 Partner | IVP | San Fransisco
In less than 60 words: Three metrics: 12-months cohort retention: +60-50% retention required, the annual pricing is the best, but pricing is inversely correlated to retention; Daily engagement rate (DAU/MAU): +35% to join the A-list, but each vertical is slightly different, GTM expenses on GM: -17% of GM in freemium, and 33% in paid subscriptions.
Why this article? Three benchmarks at disposition to assess the position of the consumer product you're analysing and the relevancy of amount paid for that.
📌 Go-To-Market
Leslie’s Compass: A Framework For Go-To-Market Strategy
👨💻 First Round Team
🏢 First Round Capital | San Francisco, New York, Berlin
In less than 60 words: Two tools to go on the market: sales & marketing, but one must take the lead of the strategy. The more the purchase is structuring for the buyer and the TAM is tiny, the more the GTM is sales-intensive: marketing serves sales’ lead conversion goal. The opposite situation is product-intensive: marketing generates the demand and sales must create a place for the product.
Why this article? Understand the structure of the market and components of the product to assess if the planned GTM is relevant or not.
📌 Strategy & Business model
Winning Strategies for Service Marketplaces
👨💻 Julia Morrongiello
🏢 Associate | Point Nine Capital | London, Berlin
In less than 60 words: For marketplaces, three strength points to perform: discovery of the best supplier for the client; ensuring trust on suppliers, or maximising the convenience of the transaction. So three successful marketplace models: the repeated discovery as Uber (focus on discovery over trust), the online-first ones like tutoring apps (more convenience) and the SaaS-enabled ones like Doctolib (focus on convenience and trust).
Why this article? Assess if the marketplace is maximising the relevant success key factors according to its structure.
That’s it for today!
Do not hesitate to reach on Twitter or Linkedin if an article really touched your curiosity, or if you want to suggest your sources 😎
Have a good weekend 👋 !!
Ange Michaël AHYI
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