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VC Reveals REAL Traction Metrics you need to Raise Venture Capital
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- čas přidán 31. 07. 2024
- I’ve met with thousands of startup founders and entrepreneurs in the past decade as a venture capitalist in Silicon Valley at venture capital fund Kleiner Perkins and now at SignalFire. The most common question I hear from startup founders is what kind of metrics and milestones are needed to raise venture capital at seed, series A, series B and so on. While startup traction is NOT the only thing that matters, there are some very clear patterns in companies that do get venture capital funding. I’ll share the top metrics VCs look at, and some real traction data from a large dataset of companies that have successfully raised venture capital
0:00 Introduction + What's the data I'm sharing?
1:47 Momentum - Revenue + Growth
6:00 Efficiency - Unit Economics
8:48 What if you're Pre-traction?
Check out my other videos on startup funding and tips for an effective fundraising process here: / @nogatekeepers
This is awesome data you can’t find anywhere else. thanks so much for sharing! Subbed
I found this channel randomly; glad I stopped by! Great content! Will definitely recommend this channel!
Thanks! Great to hear you like it!
@jayhoovy! Love your channel too! :)
The data in this video are skewed a bit towards Silicon Valley funded startups, so the numbers may be a bit on the higher end of growth and traction. Also not all VCs may have the same return profile; some may act a bit more like private equity investors targeting 3-5x returns rather than 10-100x+ returns, and so they may be ok with slower growth. Even within the Silicon Valley venture capital world, not all VCs weigh traction the same, and can weigh different traction metrics more heavily, so it adds quite a bit of variability in the traction of companies that do get funded.
This is one of the most very informative venture capital related videos I've ever seen. Very practical and realistic. Kudos Wayne for sharing this one. I'm a second time founder, but your clarity in explaining the facts and complex terms behind every metrics were surely easy to digest.
Would it be possible to get your suggestion or advice on what should be an ideal approach, aside from story telling, in selling an ideation/pre-launch social network product to angels or vcs? Thank you!
@@jom9810 Thanks Jo! Interesting idea on a video about pitching social network products. I think something I'd love to cover in a video, will definitely add it to the list of topics!
@@nogatekeepers Cool! Looking forward to it.. By the way, hope its not too much to ask, but may I DM'd you in Twitter and share to you what we're working on? Thank you!
@@jom9810 Sure thing!
@@nogatekeepers Cool! I just sent you a tweet. Thanks!
Hey Wayne, your point at 5.45 really resonates and I appreciate you advocating for this transparency. Awesome work, the graphics are fantastic too btw! Thank you for sharing!
Thanks Ricky, appreciate that!
This channel meets an important need as a lot of early stage founders don’t know how and whether to fundraise (including myself haha). Love the content!
Thanks so much Jason! That’s exactly what I hope to do, very nice to hear it resonates with you!
Dude you don’t know how much you just improved my day and mental state
That’s so awesome to hear! Very happy this video helped you :)
Thank you Wayne! Keep it up! This really helped me understand why the founders of the start up I work for do what they do!
Thank you Panos!
Thanks for this. Very insightful
Would also like a similar video on seed rounds
Thanks Abhi!
I try to address how to think of traction if you’re at the seed stage at the tail end of this video, but definitely happy to go into more specifics, or make a video about seed stage fundraising more generally! Let me know if you have specific questions in mind
We're exploring what we can do to help with climate change. However, a lot of these problems are b2b with tons of regulations. Tough to churn out an mvp and get traction. Would like some advice around hard tech seed round funding
I love every minute of your videos. Clear and Concise, no non sense! Thanks for putting quality content especially for Entrepreneurs.
Thank you so much Elijah!
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Can you give your thoughts about this scene.
Is Russ telling the truth about other VCs?
@@elijahjohnyarra Definitely not lol! They're confusing revenue with cash flow. Startups reinvest their profits back into growth, so they often don't have positive cash flow for a long time.
@@elijahjohnyarra I don't think so - they confuse revenue with cash profit. Startups reinvest in R&D and growth so they are usually cash consumptive (hence needing VC), but definitely important to make revenue!
this is incredible knowledge
Thank you!!
Really interesting data, thanks for sharing! And love the visuals!
Thank you!
Thanks for putting this content out Wayne! You just gained a subscriber :)
Thanks Alfonso!!
Such good content on your channel!
Thanks so much Andrew!!
I came back to watch this video again and am trying to figure out the convincing tractions for a vertical integrated (hardware, software and content) product, very helpful, thanks Wayne.
Thanks for the note Paul! I think the safe thing is to mostly focus on just the recurring software part of your business when evaluating traction milestones, if you can
@@nogatekeepers Thanks Wayne for the response and suggestion, we will see what we can do.
@@paulhuang2006 Good luck!!
Hey again Wayne! How about a series on angel investment? There is a lot of content abt VC funds but not a lot about angel and seed funds. It would be really helpful for us to gain knowledge and you to gain attention to ur channel.
Great idea. I will try to make more content that is relevant to angels. I'm actually editing a video now on how VCs conduct due diligence which is perhaps the most common question I get from angels. Thanks SaiKeerthi!
Hey Wayne, can't say enough how much appreciate your content, and the editing has gone up by miles! Wanted to ask you about consumer vs. enterprise multiples though, one of the things I can't help but feel is that the hypergrowth consumer facing companies like Sea, Upstart, i.e. consistent triple-digit growthers should trade at a higher multiple or at least closer to SaaS than "slower" growth SaaS companies (NET, DDOG, CRWD, SNOW) of the same upper-tier caliber, but evidently there's still a wide valuation gap.. Surely after 3-5 years, higher exponential growth wins out over margins? Curious your thoughts!
Thank you, still experimenting with my style so it's helpful to know you think I'm progressing! On consumer startups, they do indeed grow more quickly sometimes but it's a bit easy come easy go. They lose customers much more easily too, and they tend to trade at a lower multiple as a result. The businesses can also be less defensible so over the long run. Those may be a few of the reasons we've probably seen less valuable consumer transactional startups than SaaS companies as of late.
@@nogatekeepers Thanks, that's helpful 😎
@@tenbagger You're welcome!
😁 can you upload videos more often 😎
haha I will try!
Appreciate all the insights Wayne! I'm curious to know your thoughts on the future of VC during this time (& whether you think there should be changes made to the standard model)?
I think the model is going to institutionalize over time where you have much more sophisticated operations - vertical practice domains like McKinsey, large support teams like private equity, and so on. I think SignalFire and others are leading the way here
@@nogatekeepers That's a compelling perspective. How do you feel this will impact the way VCs view startups *and* vice-versa?
Do you think the move towards more specialized verticals and larger support teams will lead to a stronger interdependency between startups and VCs or do you think that something like bootstrapping will become more popular?
Interesting question!@@ganeshthyagarajan5616 I do think some startups will be more tightly integrating with VC platforms. At the same time, if the barriers to coding and AI continue to fall through platforms like Bubble and OpenAI etc, I do wonder if more companies will bootstrap further before taking VC
Great insights! I would really love to know the source of the data that you have referenced in this video. Any chance you can provide that?
Thanks! Here is it: pilot.com/report/founder-salary-2022
What in the world is this guy talking about. And I understand Finance but this is going way over my head. Might as well be Japanese.
Lol sorry it was confusing - startup finance is it’s own language I guess!
@@nogatekeepers Thanks for the response - its much appreciated. I know the finance elements of business - gross profit, AR etc. I am trying to understand the different ratios, indicators that you use 2 analyse 1) the business 2) the returns. I am also trying to find out how the VC gets paid - say you own 20% of the company - I understand that you own 20% of the value - but do you also get dividends? I remember this shark - kevin - always talking about getting his money back.... Im trying to understand the metrics, legals and payment structure.. Thanks
@@m77ast The sharks are a different kind of startup investor - typically those companies they invest in are consumer product companies and not technology startups. So they may have their own unique structure, like royalties or so forth. In more typical venture capital, investors are just trying to capture the pure 100x upside and not worried about being paid back their principal investment right away, hence lack of dividends