got it okay so I'm going to Dive Right

In assuming this works okay everybody

can see my screen hopefully looks great

all right awesome so what I'm goingon to

do is highlight these two sections here

PR preparing Financial projections and

determining your funding needs those are

the areas that I'd like to talk about

today you're you've got all your other

areas being covered as far as

fundraising goes um a key important you

know thing to keep in mind here is that

long-term goals that don't have a series

of short-term goals they tend to be more

aspirational than achievable and often

in a pitch deck we're talking about the

Tam we're talking about the size of the

market we're talking about curing people

changing the world but have we nailed

have we thought through the details of

those short-term goals and that's what

the financial projections are

essentially doing um there was talk

about being realistic um storytelling

the more nuanced the more believable a

story is when it has flavor in it it has

actual detail it's not just broad words

so setting Targets in your projections

that can be evaluated for example

year-over-year growth of 100% where did

that number come from is that something

that you you got through chat GPT or

Google that said you should grow by that

amount or did you think through the

Journey that you're going to go on to

unlock

different users um different customers

different channels so the more that

you're actually telling the story of how

you are going to execute your business

plan um the more realistic your story is

going to be so keep those two things in

mind another thing is enjoy the ride try

to enjoy this boring presentation as

best you can but this Venture that

you're on is a long haul nothing says

that more than the funding landscape

we're in today but I think you're very

lucky to be in a fundraising right now

because a few years ago when money was

just being given out people didn't go

through the detail and the depth in

order to fund raise and then they got

stuck so here you're in an environment

where you really do have to spend time

with your plan you have to measure twice

and think uh and cut once you have to um

do a lot more pitches and I that that

will be better it'll be better for it um

and I would say figure out how to enjoy

every part of the process even the

painful financial pieces so let me dive

in here and at the Crux of what we're

trying to do here is describe to the

investor how you're going to make money

and not just how you're going to make

money but how we how are you and the

investor how is this going to make money

for the investor so that's the mindset

we get we get focused on what we're

doing with our business and where we are

going to get to but keeping in mind that

the investors bringing money to the

table perhaps an angel investor

investing

$25,000 with 10 other investors what do

they want from that

experience if they could be coming on in

a followon round you could be a sample

25,000 what do they want to see in a in

a couple of years from your business in

order for them to double down those are

the things to be thinking of when you're

pitching um how much is enough and how

much is enough comes down to revenue and

fundraising um so let me take a take you

through you know this is kind of

commonly known information right and

Investor's looking for 10x return why do

they get 10x return on every deal no

it's because out of 10 Investments one

is going to be 10x two is gonna you know

it slides down basically you're going to

have four that aren't going to do

anything and at the result if you

average it all out is about 2.3x

that's sort of the breakdown so when

you're pitching you're not going to get

interest if you're pitching a two times

return you got to shoot for that 10x

return you got to think through what

that

means um okay so that's a key important

detail the other thing to keep in mind

is what does that look like so 10x

return is of the scale of anybody here

of T2 D3 that is you get to a million or

two and revenue and then you triple your

Revenue year-over-year you triple your

Revenue the next year then you double

double double So within five years

you've gone from two million to 100

million that is the magnitude of the

scale of the boldness that I want you to

be thinking in terms of big big big big

does every deal need to look like that

no is it even possible for every deal to

look like that no but in general you

want to be thinking

bold you also want to think with that

boldness who is your ideal customer who

exactly who are the people that are

paying you like and when I say who right

down to the the the personality the way

they perform though how the recurrence

of their purchase are they buying one

time are they um is there a big one-time

cost is there a routine nature to their

um product is there seasonality involved

we were mentioning that what's the

invoice Cadence that works for them when

we talked about going from regular

business into Enterprise deals the

Cadence of that money tends to change um

and and in general is your pricing model

in including um any motivations for the

the amount of Revenue to go up so is

there a variable piece in there that the

more they engage with your solution the

more that they spread the word um that

the volume from either per customer per

Channel per some sort of unit is driving

additional Revenue all of that is

something you want to think through

intimately not just in Broad Strokes you

want to have in your mind who these

people are who is the buyer if it's

Enterprise it's still a person it's a

person sitting behind a desk who's

making a buying decision so keeping

those things in mind you also in this

day and age have to think of the CFO if

you're selling into Enterprise and

you're selling into um a particular

department they got to run it by the CFO

so that's another thing to Al also be

mindful in this

era the other key thing so it's how much

they're going to pay you for how long

how long is that customer relationship

is it months is it years thinking

through the long-term nature of uh the

customer that is really important for

some of the businesses you may want to

have add-ons in order to ensure that

you've got that customer for as long as

possible because in most investable

models you do the money and investment

upfront and then you have that long tail

of Revenue that's what excites investors

so keeping in mind that long-term

relationship um and I'm I'm going rapid

speed but I just have a lot to cover for

you we can share the slides too so you

can refer back to them and I this is

being recorded so you can probably

follow up but I apologize for being so

one-sided here and not engaging with

questions um if you do have key

questions though feel free to throw them

in the chat and so I can also um address

them one of the other variables and

these are all things that end up in your

projections when do fees increase is it

more users is it unlocking features is

it multi-channel so you've got one um

e-commerce solution if you start to

integrate with other e-commerce

platforms for example is there a pricing

difference there is there renewal fees

are they higher lower what does all of

that look like those details matter and

you won't know early days what you're

going to be like in five years but you

certainly are testing all this stuff as

soon as possible and you're laying out

that story your those are all details

that matter in having confidence in your

projections

so Revenue metrics what Revenue metrics

do you want to keep in mind ARR growth

annual revenue growth year over year so

again shooting for tripling two years

doubling three years T2 D3 that's the

kind of scale that I want you thinking

the next one is net dollar retention net

dollar R it's called net dollar

retention it's called net revenue

retention it's Kleenex tissue same

metric it um the you want to be shot um

shooting for something that is basically

120% which means that if you had a

customer that signed up a year ago a

year later they're paying you 20% more

the revenue from your customer is

growing over time so early days you want

to be designing that into your business

model and that should be reflected in

your projections so that you know those

are complex things to put into an Excel

spreadsheet but it t it's worth the

investment to ensure you've got it in

there and certainly in your pricing you

want to be able to speak to why a

customer is going to pay 20% more next

year than this year and by the way 20%

more the following year is it the same

rate but there's more users is it the

same fee but there's more features

unlocked what is it about that

relationship that's going to go grow

Revenue that's very interesting to

investors because it tells them that if

you ran into a a challenging period and

couldn't invest in sales and marketing

to acquire new customers that your

Revenue would still grow so you'd be

able to coost and continue to cover um

expenses so that's a really important

metric and the third metric here that

from a revenue standpoint is a payback

period so when you bring on the customer

how long um does a customer need to be

with you before their revenue has paid o

paid off the acquisition costs um those

are three things to keep in mind make

sure you got them

covered big markets we're looking for

how big is your total addressable market

and then your piece of the pie this just

builds into the confidence you're

talking your Tam Sam I'm not really

covering that here but again if you're

going to say that you're going to go

after a certain piece of of Revenue

ensure that it aligns to how big you

said the market is and that you're

assuming a reasonable piece of it right

out of the gate if

if the investor doesn't believe you

could achieve if you say the addressable

Market um your piece is going to be 80%

of the addressable Market that would not

be considered believable so just doing

your research around

that you want to map it out as well so

if I was to choose to go to San Diego I

like to pick San Diego it seems like a

lovely place to go um and I wanted to

get there at a particular time the best

way for me to understand if I can make

it on time is to understand when I'm

going to be stopping am I pausing to

sleep am I doing bathroom runs where am

I going to gas up or charge my electric

vehicle it's the same on the financial

projections you know you want to go big

you know you're going to have big

Revenue you probably have the hockey

stick chart in your pitch deck but how

you're going to get there requires you

to take a look at honestly the details

of how many customers you're going to

acquire each year just doing it on on

percentages is not going to be engaging

because you're not going to have thought

through that yourself exactly how many

customers where am I going to get them

what are the activities I'm going to do

to get

them also an area that people I find um

fall short Founders by and large charge

too little come out of the gate charging

too little if you're entering a

competitive space and have decided that

you are going to be the affordable

solution it's a difficult hurdle um to

to then raise your prices later so keep

in mind that you want to be clarifying

for yourself is the price I'm going to

Market with enough for me to bring in

the type of money that I need in order

to generate the returns that my

investors interested in seeing so that

there are some metrics there you can

basically reverse engineer metrics to

understand how much you need to pay and

a lot of times I see clients they launch

with a product that's two $300 a month

and within 18 months they're up to

$2,500 a month because they never would

have made a viable sustainable business

out of that original amount so just keep

challenging yourself to understand um

how much you need to be charging is it

enough for the

model uh so here's your revenue forecast

checklist these are the things you just

want to make sure that you cover in your

understanding of what those projections

are going to look like and you know this

projections they're they're half science

half art they're a bit of both they need

to projections are mathematical so the

numbers do correlate with each other

however the story and the Nuance of it

is a form of an art and there are

assumptions that are are laid in um but

ultimately the the end numbers here your

average revenue per customer the number

of customers your adding over time um

the amount of contraction insuring

you're going to have of customers the

growth rate um all of these details when

are discussed in an investor Q&A

situation will help build or um you know

help or hinder your confidence um in

their

eyes I just want to speak to confidence

for a second the thing about confidence

here is um

so a lot of people are not confident on

the financial piece um what I want to

say is most people feel that way what

you you know the Scotia Bank you're

richer than you

think you know more about your numbers

than you think all numbers are is a

essentially a translation of the story

The more you can speak to the

story The more you truly are

articulating the numbers and it's very

easy for you to be able to use your

language whatever your spoken language

is to convey to somebody who can plug it

into a SP spreadsheet and um and and you

would then only be sharing your verbal

word letter language in a way that

conveys the numbers so just you know a

lot of people I think get scared by

numbers and they uh abort their

financial um thinking because I have to

don't know my numbers I don't know if

you know what your plan is if you know

when you're stopping for gas and where

you're going to stay overnight that is

three quarters of the battle in

confidence around the

numbers uh so from a revenue standpoint

projections should start with revenues

projection should be done on a monthly

basis not just annually so don't just go

year over a year because you're missing

all the juicy details that will happen

in those months um so startart your

revenues on a monthly basis um inside

them make sure you include those

different assumptions that we made and

then I'm going to dive into expenses

because once You' it's kind of fun to PL

map out revenues honestly you feel

pretty good you get a big bold number at

the end and this this is pretty good now

it's how are we going to get there what

do we have to do everything that you're

going to do is going to cost money

because you're going to have to pay

people to do things so keep in mind

these philosophy

uh measure twice cut once spend a lot of

time on these numbers you'll look at

them you'll come back and you'll you'll

probably uh you know rip it up and start

again get very comfortable in the costs

um people think my plan is conservative

that's a common thing probably isn't

probably not conservative enough just

like construction workers doing a

kitchen

Renault twice as much um twice as long

as you think it's going to cost twice as

much as you thought

um so just keep that in mind uh it's

going to cost a lot more be ready for

that um be mindful of variable expenses

versus so variable expenses essentially

expenses that are tied to revenue so if

you're selling a SAS product you may

have Merchant product Merchant uh

processor fees so for example uh stripe

fees uh 34% of Revenue that you just

want to consider because if you don't

consider it and it gets caught it looks

like you're not knowledgeable on your

costs um Cloud hosting fees AWS Azure

those they give credits for startups but

eventually that cost becomes quite

material you want to factor that in

often five to eight% of Revenue um if

you're a product company obviously you

have all of your uh inventory expenses

that you need to factor in you're a

service business you should expect that

at least 50% of your revenue is covering

direct costs associated with that so

always make sure you've isolated out the

variable costs um that tie to the

revenue so um things like rent um year

end accounting all that that's not a

variable expense it doesn't necessarily

go up in correlation to your Revenue

variable go up in a direct correlation

and if there's a big investment required

often there is at a so for example

startup in aass situation good chance

the founder and the dev team is

troubleshooting with clients they are

essentially the starter customer success

team as you grow and your revenues get

to one two million now you're going to

start to invest in a customer success

team their role is to to sustain your

Revenue to grow that revenue from

customers uh reduce churn that now

becomes a variable cost to your business

so you'll want to make sure that you've

got that factored in again when you get

to uh 1 to two million in annual

revenue on the expense side of things so

once you've covered your variable costs

here's the rest of the cost categories

that you have group them in by

departments because that will help make

your kpi uh metrics much more efficient

to calculate and it also demonstrates

that you um are projecting your business

in a way that is typical of an

Innovative company if you start with for

example what an accounting firm's GL

would look like it's maybe in

alphabetical order or it has all the

salaries in one line you want to make

sure that your your um organization is

more sophisticated than that salaries

are allocated to the right department so

you have your R&D team you have your

sales and marketing you have GNA which

is kind of all the overhead just for

running the business CS is the customer

success generally I would keep that out

separate when you're smaller then you

don't necessarily have to include it in

your gross Market Marin I'll spare you

the uh accounting lingo there but um I

just want to make sure that you do have

a setting for it um any offsetting

grants and then keep interest in

depreciation separate and that's

primarily because you'll want to

efficiently calculate evida and which

does not include consideration of

interest and depreciation so this is the

structure that you should have in your

let's call it an Excel workbook Excel

Works still the best technology uh on

the market if you want to call it

technology well it is technology but

it's very rudimentary um but it's the

most accepted um for uh doing

projections that are going to be shared

with uh investors uh be wary of Google

Sheets uh because they generally you'll

be asked to uh download them into Excel

and formulas can break it's not quite

where it uh we want it to be yet uh so

I'd recommend

Excel um and then so you've now if

you've put out your revenues by month

you've put you filled in all your

expenses by thinking of who am I hiring

who do I need for sales and marketing

what are the activities they're going to

do what trade shows do I need to go to

um if your med device you probably don't

have the revenue piece but you got a lot

of expenses on there look at the

difference between the two and I didn't

get into timing differences of of

invoicing but essentially let's in

simple terms the net difference is your

flow short fall that is how much money

you need to be thinking about how much

you should raise so that one of the

questions I'm often asked is how much

money should I raise the comment that I

how much money do you need this is

getting you to that so you don't know

how much you need until you've done this

journey don't get too married on 250,000

2 million5 million by the way in the US

right now people will say yeah it's just

as easy to raise five million as as it

is to to raise two million or or the

magnitudes are 10 to1 what they are in

Canada the probabilities are not there

for closing those deals though so don't

just assume that these round numbers

that you hear anecdotally in the market

are appropriate for your business what's

most important for your business for you

to know intimately how much you need in

a climate like this it takes longer to

raise that's still on your side in my

mind because you're going to spend more

time um with the underlying plans that

you have and and a lot can be changed so

for example you could um in a plan where

you're you're planning let's to get to

100 million in five to seven years in

order to reach that you're going to have

um a revenue stream that's probably

direct you're going to have a channel

Revenue stream um these are very

different the whole selling process is

quite different from each other instead

of going at all three at once or all

three strategies at once you could stay

them so that for the first bootstrapping

stage you just going after one bracket

of customer and you're focused on them

and you're getting your revenues to a

certain point and then on the next raise

you're going to be using those funds to

unlock another channel so keep like

you'll you'll be coming back to the

board a few times to try to understand

your answer to this how much money do

you need and so when you have the number

in mind you're going to be asked what

are you spending it on these are the two

common areas customer acquisition so

that's sales and marketing costs and

product development those are the two

key areas if you say that I I need some

money for admin I'm going to need an EA

no this is focused um effort that is

going to generate a key return so hold

off as long as you can to the point

where you're able to demonstrate that um

that investment in sales and marketing

is going going to translate into

customer uh customers and revenue coming

on board and this is these are the two

primary areas in investors are looking

to for you to spend your money

on um what key metrics are we looking

for um around customer acquisition it's

um got my line here can't see my what do

I have first their

customers I can't read the first one I

see LTV to CAC though um so your

lifetime value to the cost of

acquisition of a customer and I'll go

into these um how you calculate these in

a little bit payback period new Mr added

over the previous month um and let me

see if I can move this so I can

see oh customer customers added per unit

of time so getting a sense of your

that's velocity of customers being added

how many customers are you adding each

month if you don't know that number and

you have projected ections any of you

that are pretty proud of your C your

projections right now do you know how

many customers you're adding each month

or is it percentages make sure you know

how

many um an expense checklist so here you

go sort by Department as I covered um

you want to trans ideally if you're

operational today you're going to

include history so you'll have your

profit and loss by month that takes you

up to to date and then your projections

are going forward that will show the

investors the continuity if your

bookkeeping is in Champs let's just get

that all caught up so that you're able

to do that but ideally you're going from

historical to

forecasting um you do want U the

expanded breakdown as I mentioned by the

different departments um and assumptions

around Revenue per head count expense

per headcount those are kind of um

numbers that you'll want to have on the

side so they just give a sanity check um

and then be be sure that you understand

how to explain verbally that customer

acquisition strategy a lot of people

come to me and i' I've done this I've

reverse engineered forecasts for

companies based on the ideal metrics I

really hate doing it because what it it

means is that the founder doesn't

actually know how they're going to

acquire customers and and I get it you

don't know when you bring your expertise

to the table it's likely not that area

you know your domain you're a scientist

whatever

the important thing though you have to

go and learn what is the activity that

best suits sales and marketing is Broad

a lot of companies try something it

doesn't work they try something else

you'll want to really be intimate again

with that customer Persona how do they

receive um material in order to consider

your product how long does it take to

sell to them do they need other

approvals know that in

intimately um other key things you need

to know at the moment when you're

talking to investor how long you're till

you're out of money that's a humbling

moment because a lot of us it's far too

soon than we'd like to admit um but

honesty is important right there you are

having the opportunity to be honest they

will sniff it out if you're lying how

long do you out of money you want to

know that how long ter you're eida

positive that means profitable and it

means you're revenues are actually ex

exceeding your expenses when you're a

startup it's a long time away but

investors want to know that when they

give you money that money is going to

last you in this climate they'll want to

see that that's going to last you two

years so you need to know how long uh

money's going to last you need to know

if all goes according to your plan when

will you be evit a positive and these

things change all the time by the way 10

years ago this was not important

profitability and SAS didn't go hand

inand nobody cared it has really changed

every business has to understand when

will I become e beta

positive okay sorry for that bad news

for people like me we don't mind it

because we think it builds strong

sustainable

organizations um but it's not as sexy

sometimes key performance indicators

here you go here are the key ones um

that you want to make sure you're

covering they will all come out your

projections so once you got your

projections done this is just a matter

of math and not complicated math by the

way I think this grade five grade eight

I don't know I should test my kids are

getting too old for me to test them but

you don't need to have very complicated

ma math but you just got to have them

calculated iida this is a breakdown of

how you get there it's just essentially

adding back interest taxes depreciation

it's it's they'll call it how much money

you're making this I went through the

net dollar retention I'm also mentioning

gross revenue retention customer

retention is really important so this is

this grr metric is a sister or a cousin

to the net dollar retention I don't hear

as much about it but people are still

obsessed about churn so churn is is

really important but you know what

you're flexing if you start talking grr

people are gonna go oh you know your

numbers so not bad to have a financial

Flex in your in your uh chats with

investors

too um so Runway considerations for

Founders how long before we're out of

cash how quickly can Investments turn

into cash and is there a direct line

between the investment and revenue

you'll want to have that Clarity this

$250,000 is going to get me how many

customers how quickly how quickly will I

be Break Even when do I pay the next

return when's the next fundraiser that

that will unlock these are the specific

things that you want to be confident on

and you know we don't know we don't know

what the weather's going to be like six

months from now but the more that you

have a thought you will build a belief

beliefs are repeated thoughts you know

your story you know your plan you have

to execute on um executable actionable

goals those will lead to the end results

that you're going to convey so you don't

have to look to somebody else else for

the right answer to these these are very

intimately your answers they will be

different for everybody so just make

sure that they reflect what you believe

and you'll that will translate into

great

trust lifetime value this one is people

get confused on this is simple math

churn is actually if you track your Mr

your monthly recurring Revenue each

month um by client you have to do it by

client by the way yes it gets T Ted but

is very important you'll need to show in

due diligence 36 months of recurring

Revenue by client so you'll want to make

sure you're tracking it as quickly as

you as soon as you can if you're not

doing that today from that you can

calculate your um turn rate and so you

essentially do your drop in mrr from the

previous month and I would do a trailing

three month because if your revenues are

low it gets lumpy but once you have that

number you take take one divided by your

churn rate monthly churn rate and that

tells you the lifetime so a 1% churn

rate equates to a 100 months so you may

not be in business for a 100 months you

don't know if a customer stays with you

100% um 100 months but you can say your

your lifetime is 100 months if your

monthly turn is 1% okay it's smash hard

hard um easy factual math the lifetime

value is um I've put the math here for

you the average revenue per customer

multipli by your gross margin which is

your revenues minus your Co your

variable costs um multiplied by the

number of months that we've just come up

with in the prior uh tab so 100 months

multiplied by an 80% gross margin

multiplied by your average revenue per

customer that's the lifetime value

whether it's conven is how much money am

I going to make from my customer over

the average life okay and there's the

simple math and again you'll this will

be a bit of a cheat sheet for you to to

double check when you're doing your

projections uh CAC people say how do I

calculate my CAC and they just have

their Google ads in there CAC is all of

your sales and marketing costs divided

by the number of customers that you sign

up for In the period so sales and

marketing total you signed up 10 C

customers total sales and marketing

divided by 10 that's your pack um and so

your payback period again I won't go

through the math because you're never

going to remember this off the top of

your head but here's the math for you on

Payback period okay pretty simple math

by the way I'm giving everybody like you

you'll get a calendly link if you want

to talk through troubleshoot any of

these with me you can have a one-on-one

happy to talk them through and see how

it relates to your

business what are good numbers here LTV

to CAC anything greater than 3 to one is

considered investment worthy investors

will be happy with payback period less

than 12 months so you don't want to take

F five years for the revenue coming in

to offset the costs we want a payback

period of within 12 months retention of

customer so high customer retention from

an Investor's model that's the tricky

thing so if your product today isn't

something that customers buy repeatedly

consider what else you might want to add

to that in order to retain those

customers so 90% retention

year-over-year 1% per month churn those

are sort of opposite numbers of each

other burn rate is the amount of cash

you're burning through how fast do you

burning through money could now keep in

mind burn rate is actually um first of

all these metrics are not governed by

anybody so if they are not accounting

metrics um they are maybe Financial

metric you will find them on Google

written by marketing people not

scientifically confirmed so what I'm

explaining to you is is from dozens and

dozens and dozens of deals so these you

can trust when it comes to burn rate I

always ask how do you calc calculate

burn rate what somebody's asking because

some investors or institutional

investors will just have it be a formula

that will vary from others so sometimes

it's intended to measure cash but but

the reality is in a lot of our

businesses we're charging clients on an

annual basis not on a monthly basis so

um it may not be a measure of cash and

it may be revenues minus expenses so in

a situation like this when it comes to

confidence I want you to be comfortable

asking questions about how do you

calculate that if if a Investor's asking

you a metric and you're uncertain about

it could you break that down do you have

a definition I want to make sure I'm

giving you what you're looking for that

exudes confidence no shame there a lot

of people are scared to ask don't be um

when I'm on due diligence calls some

Founders are make those comments like oh

you asked I couldn't believe you asked

the question well that's how we know um

so don't feel like that will lose

confidence um yeah when in do always ask

so confidence it's you're be confident

on your business not on investor your

they're looking for your Kool-Aid you

probably lit up when you talked about

your product Your solution what you're

solving for the world just keep that

light shining through the numbers

section of it um and just tell your

story don't worry so much about the

numeration keep to your story keep that

light on don't be fake don't be trying

to guess uh or say numbers that you

write on the internet that aren't yours

because it's just going to

show um I'm going to quickly go into due

diligence checklist here you go you want

to know what you need this is all the

things cheat sheet for what you need in

your due diligence checklists and some

data room tips um I recommend a

Dropbox uh because it's the it's the

most generic with people being able to

access it um create one for each

investor don't create one and invite

other multiple investors into the same

one because when they start to ask you

intimate questions and want you to share

you don't necessarily want to share um

that with everybody so a separate uh

Dropbox folder for each investor that

you're exchanging with um share what's

requested no more no

less uh for a variety of reasons but

you'll get down rabbit holes people

trying to overshare is um Canen Road

confidence so just share what they've

asked for uh be mindful of Version

Control as you go start to go through

this process you're going to be talking

to one or two investors they're going to

be headed down One path and then

somebody's going to wet your whistle and

all of a sudden you're gonna no I can I

can raise twice as much money and go for

um and I'm going to change my

projections keep your story straight

make sure that you're consistent with

what you're explaining to each investor

it's okay if you're going after a

million with one investor and two

million and you've got two different

stories because they're two different

amounts of money but don't blend the two

make sure that you're aligned with what

you're

explaining um and I say be ready to be

ready the this is a bit like a test you

know you study for exams we all have the

exam nightmares so we all no matter what

our age we remember exams being well

rested

wellfed and and Zen uh is the best

advice I can give you when it comes to

uh keeping your confidence level up for

due diligence questions um be

ridiculously organized um deals don't

close because trust gets lost and one of

the main reasons why trust gets loss and

whether it's fundraising or selling your

your business um it is taking too long

to supply what's been asked so get

yourself organized do the pre-work to

have that due diligence folder ready to

go and you'll unpress the hack out of

investors who may not expect it by the

way they may be sporty and love you so

much they give you money early days um

without that but why take the

risk

um be fast with your turnaround so

always be timely acknowledge every

request coming in um expect questions

and more questions try not to be

irritated they will ask you things

you've already answered um they

sometimes I see Founders change their

numbers because they were asked multiple

times about so that's making the founder

think that the investor somehow doesn't

believe it or doesn't trust it so they

change their don't change your answer

just stick to your answer try to be

patient we love

investors um and encourage a quick

Cadence of follow-up meetings when you

go in and you have the first due

diligence meeting and they say well

we'll take it out we'll take a we'll get

back to you you know what I'm available

and three days later or five days later

whatever drive that timeline um

demonstrate that you are eager and ready

um and I think that goes a long way as

well there's my cly I whipped through

that I am sorry for the pace um but

let's go with

questions okay Susan do you want help

moderating the questions or you wna just

them yes yes okay then I suggest just

put up you know raise the hand on the

little on the little thing and if you

can find it just put your hand up okay D

you're first go

ahead thank you thank you so much for

the for the great session Susan um I

have a question around CH rate

so for uh for business that for

businesses that are two-sided so you

have the B Toc and the B2B side so which

one which one which one matters most and

and in this case in my case the b2c side

are not paying but the B2B side will be

the one paying

so we like is is it only the B2B side

they want to see turn rate for all or

both of them good question so so the

money is where the money is coming is

the key area um so if you're getting

money from the B2B that's where your

metrics are all be based on but

presuming the B2B um interest is based

on having a volume of consumers on the

other side your they're going to be more

of a cost base to you um but anything

Revenue generating your metrics are

primarily driven from the revenue side

so the net dollar retention the churn

all of that is on the the the the side

of the business that's generating

revenue for you okay okay so so how do

you not okay I think I think I know the

answer already but I ask anyways so how

do you not agree about the numbers

when like for example we've not we've

not kickstarted the B2B site we are

still working on um user acquisition

okay so how do how do you now go about

the numbers so will the CH rate be 0%

since we don't have any any customers no

you can start with an estimate so if you

don't have Revenue yet and you really so

you you don't have any data um then pick

an estimate of how long you think a

customer is going to be with you and

then as you start to have customers

start tracking right away so you can

start to get a sense until you have

$100,000 in recurring Revenue generally

you're not going to be able to rely too

much on your data it's it's just going

to be lumpy but watch it that doesn't

mean ignore it see what customers are

doing if they're churning away

understand why iterate from there um but

early days just pick an estimate on how

long and you know a reasonable one 100

100 months for example is is a long

customer relationship but some

organizations um

can you know think about what other

types of products are like yours and and

how long a customer stays and with that

um relationship okay sounds good sounds

good thank you thanks a lot my

pleasure I is it my turn okay hi suan so

you mentioned about the eida profitable

can it be also uh set bre Break Even

Point yes absolutely yes when it reaches

zero that's break even um and there's

you know arguably there's sort of two

different things so EIT a positive is

considered break even there could be a

scenario where you're not even a

positive but you are cash flow positive

and let me explain what that means if

your business is one where you in issue

invoices for subscriptions annually in

advance you're actually going to have

the cash coming in before you recognize

the revenue so from an accounting

standpoint if you have 12 months of

Revenue that you collect from the

customer up front you really should be

recognizing only one 12th of that

Revenue every month so you take your

annual subscription free of 1.2 million

you got a $100,000 a month that's what

that looks like from a revenue

standpoint but from a cash flow

standpoint you took in that one point2

so if for instance when you look at your

cash position and you you're you've

reached cash flow break even sooner than

Eva to break even feel free to raise

that flag with you know the qu investor

asks uh you are you break even yet and

you're not EAA positive if your cash

flow Break Even point that out even a b

break even in another six months or

another 12 months but yes we are cash

flow break even right now which is why

we're looking for your investment to

help us in acquire the next next group

of

customers as an example let's

say thank you the reason I I ask this is

is to clarify which you give an extra

information which is what good cash flow

positive it's good to reemphasize it so

the reason I ask is that let's say you

are an investor Y and you said hey

you're racing you are asking for certain

amount of money and you are supposed to

run out of money in certain amount of

month from now and you will need more

money to continue with your journey yeah

but somehow in the in the months that

you are forecasting to run out of money

you are not break even positive yeah

will you go for the investment will you

put money on that company potentially so

you really have to lay out two scenarios

here one you have to know when you'll be

a break even um two you may not want to

get to break even right if business is

going really well you attract the money

you acquire customers really rapidly and

you want to keep growing you may

continue to acquire more cash put it

into the business which is expense so

you may not actually reach eaap positive

your investers might not want you to

reach EIT a positive but they certainly

want you to be able to say that you can

be like if we only do this raise this

money will maybe take us to

sustainability like you'll want to know

that if that's possible so if you're

raising

250,000 if you deploy that and you

capture the the customers that you're

hoping to um to receive and the revenue

from that than you're hoping will that

eventually get you to break even so that

you don't need any more

money if it doesn't then you're just

letting them know some businesses you do

need further fundraising you think well

this point it's going to get me a

thousand customers and at that point I'm

going to do a 10 million raising you're

just letting them know your your

fiveyear projections should should um

detail

that and it should thank you very much

yeah okay yeah thank you thank my

pleasure so we have 10 minutes left and

four hands raised okay let's go so just

gonna ask you to ask one question please

okay go ahead

da quick question uh tips for people for

Hardware companies on how to spin the

story um versus just pure SAS do you

have any any any tips on that

non-dilutive debt so Hardware you should

be able to also supplement in other

sources of capital that will not dilute

ownership um so you will need some level

of cash in order to um do the initial um

in uh build probably but then you should

be able to play bring in commercial

Banks and other um BDC subordinate debt

that sort of thing to complement your

rate so don't only think of investor

money and if You' got a service based

business or you got product businesses

you could tap into non-dilutive sources

as

well okay

Amir uh thank you very much uh I have a

question regarding our our product that

we are developing is a lifetime diabetes

or insulin dependent it's a lifetime

disease so we don't have have the uh

LTV uh or duration for patient as soon

as they join it's less than 1% they

remove or stop using the pump so how we

can demonstrate it we have the five

years contract I got it I got in more

than got a huge support for a lifetime

uh for diabetes because it's a lifetime

uh especially if it's insulin um

continuance for type 1 diabetics so

literally lifetime of the ation is is

your lifetime of the the customer and I

know you had raised in the intro about

um alternate types of um funding so some

good news is that right now Medtech um

is still there is still investment out

there I think you have to just you know

keep going for interest um so keep

knocking on doors um you also probably

have some crowdfunding capabilities with

that solution as well it's a very human

based um and the the technology isn't

really evolv it's certainly gotten

better I'm married to a type 1 diabetic

so I understand it um but I would say

that there's lots of creative ways that

you can think about um how to supplement

your your VC Angel round um and get

creative with even celebrity influencers

social media that Lots there's get

creative I would say um and you have you

can for sure substantiate a really long

lifetime value to the uh to your

solution thank you thank you

Mara yes um hi thank you Susan for an

amazing presentation um I have a one

question how do we quantify client

acquisition costs from clients that come

from the founders really close Network

um for example in in our case uh my my

partner comes from the market access

space uh he's deeply familiar with and

and a lot of our clients are friends

former colleagues so how do we quantify

that client acquisition you don't need

to lucky you in those early days those

networks that you have those customers

coming in you're not going to have an

expense for it so you're going to have

low customer acquisition fees that's

actually a bit of a even for those that

are doing Google ads or online social

media Market marketing at a small scale

your CAC is probably going to be low and

you'll have to keep in mind that when

you get investment and you go to to

Really scale the the costs are going to

be extraordinarily you know more um so

you're that's okay by the way anytime

you do an investment in sales and

marketing your C goes way up so it's

investors understand that it's you'll

want to just project it out but you

don't need to numerate costs you don't

have so you don't have to put in some

form of like a Goodwill expense for

relationships that you have built over

time that are bringing in Revenue you

just get the benefit of that Revenue

coming in it's it just from you know to

reach a 100 million obviously those

initial relationships aren't going to

get you there but in those early days

take advantage and and don't worry about

the

cost thank you

okay

Oscar okay um my question goes uh around

that we because we have a multi-prong

approach we have a onetime we have SAS

with three different streams of Revenue

that's shortterm medium-term and

longterm okay uh how

to how to actually present that to the

investor without being too Rosy without

being overly positive and enthusiastic

because the the device itself is it's a

premium device yep there's no more money

to put to be put into the research and

development or manufacturing tools

everything is ready Y how to paint that

uh Revenue stream without the investor

telling us and you show me traction when

you cannot manufacture because you do

not have those

funds okay so you will want to separate

your Revenue into the different

categories so your your um one-time uh

Revenue make sure it's on its own

because there's going to be one-time

costs associated with that whether it's

a product cost whether it's service

costs and and you don't want those

eroding that what you're presenting on

the SAS side the SAS if you have three

different streams of recurring Revenue

there's going to be a few ways you're

going to do it you're going to separate

them out um again you want to track them

by customer then I would say this is

where the art comes into play as you

have historical data so as things move

forward and you've got the data you may

want to present it um grouping those uh

different sources of am are into one um

because that it really will come down to

what looks most favorable the thing is

you can't play with one number and not

play with another so if you decide when

customers deci or when my clients decide

like oh we're we're GNA go with this ICP

and we're just going to go with that

turn rate because that's the best turn

rate we have you can't just select one

you have to apply um your given Choice

across the whole thing and these metrics

are dial

um because the metrics have variables

inside them that are used in multiple

metrics so um I would say start with

separating out the different Revenue

watch to see how it goes um get as far

as you can make sure you can get enough

customer activity that you're actually

able to

demonstrate these are the results that

we're

seeing it's okay you're G to get to if

you don't have the revenue yet and you

tell investors that this is what you're

planning to get they are likely to tell

you especially in a market like this go

get some traction and call us back like

we're they they want to see how your

customers are

performing yeah can we use the Tam Sam

because it's on the same can we use the

Tam the Sam the bad in order to justify

our Market model the size of it yes so

so like hitting a 100 million yes yeah

um you can also take Market data to to

substantiate the amount that you're

going to be charging so if you're saying

I'm going to charge $2,000 to these

customers because here's where it fits

inside the competitive Matrix with other

products um then yes otherwise your your

projections are not going to run up to

The Tam Sam like because you're you're

going to be a fraction of that right

it's going to take a long time to get

that and it takes way longer than you

think way

longer understood thank you very much

Dave hey so um

my my business will have less Revenue in

2027 than in

2026 okay unless 2026 has been an

absolute disaster just because of the

opportunity difference between those two

years we are in a a cyclical

business and um we do have some bright

things that we can point to for example

uh being able to provide more products

to our customers who are under spending

limit so it's kind of capturing a

proportion of their spend we're position

to do that so like a basket analysis

would show some good

information but there isn't any way to

say that we're going to have more

Topline Revenue in

20127 without without lying or fudging

the numbers so much that anybody who

knew about the space would know that it

wasn't a credible number um but then

that you know that's just because there

aren't those campaigns that is a

cyclical thing how how can I tell that

story to potential investors so they

aren't spooked by that dip yeah I think

so it you know it happens so

semiconductors come to mind it's like

there's an eight-year cycle in the

semiconductor industry um and lots of

investment goes into um the technology

here on our phones that comes from that

um so you know it is what it is

sometimes in businesses um I think the

positioning of how you present that is

important stressing the positive

stressing the

opportunity um I think you want to just

depending on what the all the metrics

look like I would want to give

consideration to that so I want to look

at what you have and um I I hate to give

the it depends answer but it really does

depend um but I think you absolutely can

convey you just have to want to want to

ensure that um it is investable then um

assuming that's the case and you're it's

on a cycle and um you should then also

likely be able to pull back an expenses

in those years too because there's no

point to do additional investment in

acquiring Revenue so we're gonna Coast

we're going to get to this size and then

we're we're going to coast and maybe you

can get additional re other sources of

revenue from those same customers uh

during a period um happy to chat with

you and kind of brainstorm more um when

I know more about your business um but

yeah I like you know to use that as an

example for everybody um be real with

your business like you this is your

invest Angel Investors could be with you

for the Long Haul like um they don't

want to be there 20 years but it happens

they are likely there five to 10 five

years is a long time um so you don't

want any surprises down the road be

fully transparent who you invest with is

people that want to be with you for the

Long Haul too and they're they're

trusting you

um thanks have a great yeah that's it

that's time we did pretty good it's

5:31 uh what do you think about Susan's

presentation

today oh thank you for

thumbs um just amazing Susan look at

this Mara guy is going for it just going

for the I'm gonna stand up too they

stood up like okay thank you Susan so

very much you've got uh the oneon-one

Sarah will resend out that link to you

as well please do take advantage of that

I had some questions we didn't get to it

because the the founders had really the

greatest of questions um and uh that is

a wrap see you all next week on uh due

diligence uh with Megan Corell and red

flags thank you Susan yes and make sure

my C link uh did we get that K Lee i i s

it was in chat too I think

right there it is there it is again so I

I'll stay back if you want to grab that

um thank you just thank everybody thank

you sus thank you Susan thank you for

the great information looking forward to

chatting with you really appreciate you

supporting the program thank you bye bye

bye

bye