This is The Friday VC Digest, a weekly newsletter sent every Friday to strengthen your knowledge on the key points of deal screening and investment memos. These curated articles offer some insights about assessing pitch deck in-depth and completing 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).
📌 Product and content are two sides of the same value proposition
👨💻 Nis Frome
🏢 Co-founder | Alpha & Coderbyte | New York
In less than 60 words: The value proposition could be acknowledged by the customer by content offering first, instead of directly offering the product. The reaction on about the content offered could be the trigger to launch the product building by having a reading base aligned with your vision and your value proposition.
Why this article? Used by the passion economy, Creating content first, and building product second is more and more common, and this article explains the reason well behind the shift of the operating model.
📌VP of Finance: The Non-Obvious Hire
👨💻 Matt Turck
🏢 Managing Director | FirstMark Capital | New York
In less than 60 words: The VP of Finance is the underrated person who helps keep the house in order, either in finance or in terms of the process to provide time & leverage to the CEO to execute its most impactful tasks
Why this article? If you have of VP of Finance in the pitch deck, it helps to showcase its value-add at this early stage, and if the VP has the capability to help CEO in the next strategical moves and hold the burn rate.
📌 Sorry Guys — It’s the Size of the Wave, Not the Motion of the Ocean
👨💻 Mark Suster
🏢 Partner | Upfront Ventures | Santa Monica
In less than 60 words: Some market sizing requirements: Define the TAM by extracting the sub-segment and splitting between online & offline, and the bottom-up analysis could be needed to double-check the TAM. Check if the market growth projection is relevant at a microeconomic stage and if the market share grows up as well as the sales. And underline if the gross or net market value is presented.
Why this article? Master all these market concepts in order to double-check the assumptions of the founders and see if all of the "market metrics" are aligned with each other in the founder's point of view and ask the required questions if/as needed.
📌 Six Paths to Financing a SaaS Business
👨💻 Clément Vouillon
🏢 Founder | Memohub.io | Germany
In less than 60 words: The classic path: Bootstrapping + VC (VC at revenue and/or scale). When the focus is profitability first: Full bootstrapping or Fundtrapping (VC money for the MVP). When the SaaS is not enough “VC-compatible”: Bootstrapping + Debt + VC (VC at scale stage) or Bootstrapping + Debt (Debt at revenue or scale); and only for successful founders and capital intensive SaaS: Full VC.
Why this article? With the additional framework offered by the author on the market situation, the product metrics, or the founding team mindset, you will do better if the demand for VC funding is relevant.
📌 What’s your viral loop? Understanding the engine of adoption
👨💻 Andrew Chen
🏢 General Partner | Andreessen Horrowitz | San Fransisco
In less than 60 words: The viral loop incites a user to join a network, and invite his/her network to join him/her. 1- Choose the entryway: a user-friendly medium, with a good response rate and weak inner competition, 2- Design the funnel to remove all the friction for the user, 3- Hold a great product legitimizing the viral experience, 4- create on-ramps pushing the viral loop to leads, like paid ads.
Why this article? Discuss with the founders or test the product to understand if they are a viral loop that can be used to grab a lot of users, and where could be the failing parts leading to loss of high leads.
Why this article? Discuss with the founders or test the product to understand if they are a viral loop that can be used to grab a lot of users, and where could be the failing parts leading to loss of high leads.
👨💻 Augustin Sayer
🏢 Principal | Newfund Capital | Paris
In less than 60 words: The indicator assesses each client with two factors: industry strength, aka their industry situation, and usage strength, their usage frequency. Mixing these criteria give a score for each client, displayed on a cigarette to analyse % of MRR at risk and acknowledge the corrective actions (on pricing, on product..) to set up to reduce the risky MRR and enhance the solid one.
Why this article? Depending on the customer data and feedback from founders, you could define the predictive churn indicator and understand if their MRR is solid or not, and for what reason.
Why this article? Depending on the customer data and feedback from founders, you could define the predictive churn indicator and understand if their MRR is solid or not, and for what reason.
📌 A Quick Diagnostic to Determine if Your Sales & Marketing Teams are Aligned
👨💻 Tomasz Tunguz
🏢 Partner | Redpoint Ventures | San Francisco
In less than 60 words: Marketing’s lead generation is compared to sales’ bookings. At best, the lead generation pipeline is better or equal to the booking pipeline. The most common is increasing lead generation with almost flat bookings because of unqualified leads, disappointing product, or unskilled sales teams. The last case is bookings upper than lead generations because of outbounds closings by sales, or bookings from the old pipeline.
Why this article? Analyse the trends of these two metrics and understand if the sales achieve to close leads that the marketing team sent them, or if marketing generates the relevant leads, in short, if their GTM strategy works well.
Why this article? Analyse the trends of these two metrics and understand if the sales achieve to close leads that the marketing team sent them, or if marketing generates the relevant leads, in short, if their GTM strategy works well.
👨💻 Christoph Janz
🏢 Managing Partner | Point Nine Capital | London, Berlin
In less than 60 words: The freemium model has cons: UX & customer service costs to free users; the potential paying users’ loss, fine with the free version due partially to an imbalance of product features; and wanting to appeal everyone instead of core users. However the model has benefits: attracts a large users base, helps obtaining evangelists who are pushing the virality, and keeps hesitant users on the free version.
Why this article? You will assess if the freemium you're screening has an inherent virality, the capability to grow a huge paying base and bill them with >80% gross margin, as these are mandatory qualities to become a big paid product.
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
If you would like to have the next one in your inbox next Friday, subscribe to it 👇 :
You have read an article you think worth the share, why not send it to me and see the curation featured in the next edition 🧐 ?