More capital is flooding in Growth in equities is in earlier stages, and it is happening faster than ever. But with great enthusiasm pouring into startups big equity checks, founders are now in a unique place where they can think differently about capitalizing their companies.
Like our personal lives, where most services have become highly personalized, thanks to the data generated by our activity, startups operating online create data exits from their operations. In short, data has become an asset to every business, diversifying the type of capital that was previously available only to late-stage startups.
The data can all separate the healthy and experimental parts of a business, making it easier to use income, marketing ROI and inventory to estimate future revenue streams or obtain credit.
So how should businesses leverage their own data analysis for fundraising today?
Quickly separate the low and high risk parts of your business
Founders should think of their business as four distinct parts.
R&D, which is high risk but gives high returns and is suitable for equities at the seed level. You inject capital into the product-market with the expectation that your business will reach an inflection point. You can speculate in the early days, but it is not clear what your R&D will achieve.
Then you have marketing and acquisitions. These require you to have a high predictable ROI on invested capital, which means that every dollar spent can be measured and a positive ROI (whether it’s increased brand awareness, lead generation or conversion activities) to return. can be expected.
Inventory is where you are buying with the expectation that you are going to sell them at a certain price at a future date. And then there’s the equipment, where you have the upfront cost to build the product or store or service with a strong sense of return on that investment.
Know the value of each segment, so you understand which parts of your business are more risky (like R&D, where you’re not sure of the outcome yet) and which are more predictable (like marketing and acquisitions). ).
Build Your Funding Plan Instead of Financing Everything