If you’ve ever met with Troy, he has probably asked you countless questions about your CAC (Customer Acquisition Cost). The reason is, if you know your CAC and your LTV, then you know the unit economics of your customer. If your unit economics are profitable, you can repeat that many times to become a profitable business. Watch today’s video to hear a real example about one of our portfolio companies.
To be an entrepreneur you have to be tenacious, coachable, comfortable with risk, and have a penchant for problem solving. Those are “table stakes” that will help make you a good entrepreneur. To be a GREAT entrepreneur you need to be intellectually honest with yourself. Do away with the vanity metrics, and set up metrics that will keep you honest in how your business is doing.
When entrepreneurs pitch us we hear about how much they are raising, how long they think it is going to last them, and what they are going to spend it on. As an entrepreneur, you need to think strategically about how to spend your money. Some investments may pay back and produce value immediately while some take a while longer, thus leaving you with a shorter runway. It’s all in the numbers!
If you have watched the other MATH 101 videos, it is pretty clear that Troy is an advocate for using equity for most “real” rounds of funding. BUT, that doesn’t mean that convertible debt doesn’t have its place. In today’s video, see how to best use convertible debt to your advantage…
When deciding how to price a product, many entrepreneurs have flawed assumptions. I hear them assume that a discounted price on their product or service will bring them more customers, when in fact it can be just the opposite. Watch the video to hear Troy’s experience with this exact scenario at SurePayroll.
While some entrepreneurs like uncapped notes, most investors hate them. But agreeing to a valuation cap can send a signal that may hurt you in your next round - it could be too high, scaring off potential investors or too low, hurting your negotiating power. Here is a way to raise this bridge with a price the investors will like without signaling any price at all!
In last week’s episode, we discussed the pros and cons of SAFE/Convertible Debt vs. Equity. This week we take a deeper dive into some unexpected problems you can run into when deciding to raise with SAFE/Convertible Debt. Make sure you are always putting yourself in the best position for your next raise, always be optimizing for the future!!
When you are raising your first round of capital you basically have two options, SAFE/Convertible Debt or Equity. One option may seem to offer more flexibility and lower cost, but the other will be much more beneficial in the long run. Show your investors you know what you are doing and do the hard work up front and you will benefit in the long run!