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). (I try to stay consistent, but it’s not easy for the moment... 😅)
📌 Jobs to Be Done: Turn Customer Needs Into Product Solutions
👨💻 Miklos Philips
🏢 Lead UX/Product Designer | Toptal | London
In less than 60 words: Focus on what the client wants to accomplish, not on why they should buy the product. The client’s “Job-To-Be-Done” is a life situation desiring to be changed, led by functional issues and/or emotional aspirations. It depends on the potential client unawareness of his emotional goal, influenced by the wanted social proof, and the context around the product at the time.
Why this article? Assess if the founders clearly understand what their customers want to accomplish, where they want to go, want to become through your product.
📌 How to Hire a Head of Customer Success for Your Startup
👨💻 Tomasz Tunguz
🏢 Partner | Redpoint Ventures | San Francisco
In less than 60 words: The Head of Customer Success has one job: extend the LTV at all costs. It has to be cross-functional to understand where are the pain points pushing to higher churn & implement solutions to maximise the LTV. Must-have to accomplish the duty: customer empathy, data-driven mind, ease to be cross-functional
Why this article? If the churn is a key point of the startup's direct environment, know in the team who manage the customer success and assess if the churn could be well managed with him/her.
📌 Fragmentation & Network Viability
👨💻 Sameer Singh
🏢 Advisor, Author & Investor | Breadcrumb.vc | London
In less than 60 words: For the two or multiples-sided models, each side has to be fragmented to be viable. When the supply side has overpowered, it doesn’t share value with the marketplace and treats them just as an acquisition or distribution channel. The network effect doesn’t happen, and the marketplace cannot drain sufficient revenues. Consequently, the business cannot create network effects, it has to pivot.
Why this article? Check the components of the market, see if all the sides are fragmented and not just one of them, especially for B2B models, and if the marketplace plans to drain value from the supply side.
📌 How to analyze your revenues’ resiliency?
👨💻 Augustin Sayer
🏢 Principal | Newfund Capital | Paris
In less than 60 words: It is assessing if your clients hold your product during global crisis time. Mix ratings (from 1 to 3) of client's industry strength (fragile to resistant) and usage strength (from nice-to-keep to must-keep) to have a score. The startup has to avoid churn from rank 1-3 clients by offering discounts, ensuring plain satisfaction of rank 4-6 clients by improving the product, and upsell on rank 9 clients.
Why this article? In Covid-19 context, when analysing the data room or details about customer revenues, compare how the company assess the breakdown of their revenue with yours, to see there's a big appreciation difference in the revenue solidity.
📌 The Psychology of Onboarding –📱 The Discourse #12
👨💻 Kavir Kaycee
🏢 Product Owner | Emtropy Labs | Bangalore
In less than 60 words: The onboarding has to push the consumer to not let down the product after the first time with some rules. Among them: 1- Reduce confusion by focusing the user only on the basic features at first; 2- Make the user confident with the product with short-term rewards and 3- knowing your onboarding success metrics in terms of "minimum executed actions" retaining “forever” the user.
Why this article? Test the product if there are not confusion or desire to do the onboarding "another time..." (will likely never happen..) and ask the founders if they acknowledge of the minimum executed actions retaining their clients, showing that they control their onboarding & retention.
📌 Why your LTV might be higher (or lower) than you think
👨💻 Christoph Janz
🏢 Managing Partner | Point Nine Capital | London, Berlin
In less than 60 words: SaaS’ LTV depends on your churn rate, ARPA and gross margin rate. Keep in mind that churn isn’t consistently spread in a cohort, which could impact your LTV upward or downward. If the business model suffers an initial high churn, use a post-initial-drop-off LTV, focusing only on loyal customers. The LTV will increase, the CAC will increase, but the UE is safer.
Why this article? Discuss with the founders or check their cohorts to understand how customers act within the first two contracts. Check if their LTV calculation is the most relevant, and make basic checks on LTV calculations like customer segmentation used in terms of contracts duration or ARPA ranges.
📌 The Key for Successful Go-To-Market: Rational Needs-Based Segmentation
👨💻 Amit Maimon
🏢 Managing Partner | Lion Investment Partners | Tel Aviv
In less than 60 words: A GTM strategy stands on a previous GTM segmentation, gathering similar customers with the same "Jobs-To-Be-Done" (JTBD), as a product could fulfil several JTBD. Each JTBD holds a proper value proposition, so its own sales & marketing strategy. Once the segments are determined, analyse them in terms of metrics and volumes to choose which ones to focus. To succeed in scaling, the segmentation will evolve along time.
Why this article? Check if the customer segments are well defined, very specific; and discuss with the founders to know how they will approach their GTM strategy. Do they plan kind of sub-strategy, directly linked each of their segments?
📌 What Customer Demand and Your Startup Balance Sheets Imply about Your Startup's Strategy
👨💻 Tomasz Tunguz
🏢 Partner | Redpoint Ventures | San Francisco
In less than 60 words: 4 strategies according to your demand and your treasury. 1- Poor customer demand and a few coins: push to profitability to survive; 2- Few customers but a lot of cash: focus on the product to well serve existing clients and increase retention. With overwhelming demand 3- you can raise money from VCs or by debt if you're short, but 4- if you're full of money, go fuel the GTM machine!
Why this article? After acknowledging their level of customer demand by their traction metrics, ask the founders their overall strategy, are they in line with these recommendations seen above, should the company raise money?
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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