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4 Ways Companies Get Caught Off Guard When Fundraising

You crafted the perfect fundraising deck, but you haven’t gotten to the term sheet. From a metrics perspective, we have seen 4 common areas investors look that companies were surprised about.

1. Your pitch deck gets you to the ‘dataroom’

Many yes/no decisions are not made at the point of pitch deck, but rather once the investor gets to the dataroom. Many yes/no decisions are made here for Series A and later rounds. Investors will ask for raw data like ARR by Customer by Month to tell their own narrative. Make sure you have an “Investor View” of your metrics....not just the pitch deck metrics view.

2. You might not look at cohort analysis, but your investors will

One of the first things investors will do with your ARR by Customer data is to create different cohort analyses. It is one of the best ways to determine if you have Product Market Fit, have efficient growth, and how the business is trending. Get comfortable with talking about cohort analysis.

3. Your metrics are amazing at the surface, but 1 customer drives a majority of your ARR

At the Series A and later stages, investors want to see signs of repeatability so more dollars can feed that repeatable engine. If one customer is driving the ARR, that is the opposite of repeatability. Know what % of your ARR is from the Top 1,2,3, etc. set of customers.

4. Similarly, if your Net $ Retention is driven by 1 major upsell...

At the Series A and later stages, investors want to see signs of repeatability so 1 major upsell is not showing signs of a repeatable upsell motion. Know the impact your largest 1,2,3,etc upsells have on Net $ Retention. Does your Net Retention drop from 140% to 100% if you remove that massive upsell?

Don't get caught off guard when your company goes to fundraise! What would you add to this list?

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