Venture Capitalists invest in leading indicators - not lagging indicators!!!

Another great Insite by Michael Ho!

Companies pre revenue raises

Canva $6.6m

Kinde $ 12m 

Why did they invest?

What were they looking for?

They're looking for FUTURE revenue growth 

→ once Canva started making money

→ they went from $0 to $105M in 4 years 🤯

Raising money from VC  is about them believing in your (future) ability to hit Venture Scale

What are the indicators?

• (historical) traction ?
• the team
• some crazy breakthrough
• What else? 

Why do Many startups fail to get more funding 

Many startups raised - focusing on getting to the next milestone - hit the metrics 

→ Growing 2-3x yoy = successful raise

→ getting to $3M ARR = Series A

And was not enough for a series B…. Why?????

Here is the thing!!?

Revenue is a high level lagging indicator and VCs are looking for the leading indicators to future growth instead

What are the leading indicators to get you from $3-100m 

How do you 

→ grow at 10% mom for 24 months straight

→ and 6% mom for the next 3 years 🚀

Some leading indicators

• ICP - your ideal customer profile being nailed - and a model to get to them
• The team and stakeholders
• Have they done it before 
• Repeat purchases 
• Virality
• Energy
• growth tactic and stage 
• gut & intuition on the VCs side - 

So - when VCs say  “you need more traction”It’s bullshit

The Gem

Dig deeper and figure out what leading indicators you need to de-risk

And use that as your roadmap 💪

Article from Michael Ho 

https://www.linkedin.com/posts/themichaelho_canva-raised-a-66m-seed-a-15m-series-activity-7274788934562324480-JAu9?utm_source=share&utm_medium=member_ios