Jon Attwell
So they’ve looked at your pitch deck and you’ve got the intro. Now, you have 30 minutes to win over an investor. What do you tell them? What would be convincing enough for them to buy in? How do you show them what’s possible?
The simple answer: Demonstrate that you are set up to grow.
What is growth in this context? After investing and working with hundreds of startups, our company Seedstars defines growth as the processes in your business that, when put together and optimized, make for sustainable and compounding value over time.
For founding teams and investors alike, it can be incredibly rewarding when the parts of a growth engine work together. Serial entrepreneurs can relate to the joys of mastering cost-effective customer acquisition, onboarding that kick-starts long-term retention and customer service worth talking about. This is one reason why a customer journey map can be particularly useful.
Show investors you have the customer journey mapped out
Customer journey maps come in all shapes and sizes, but practically, such a map represents all the mini-processes that customers are put through and the pathways they are led down. Its purpose is to spot where to improve and work so that the transition from one step to another is seamless.
Showing a clear understanding of your customer journey allows investors to not only understand your business better, it also shows them that you do. Here’s how you can lay it out clearly:
- Begin with a collaborative whiteboard.
- Consider all the ways and means (channels) that customers typically discover your business.
- From start to finish, map each step and the pathways that exist in your full user journey — from signing up, registering, checking out, referring others and retention communications.
- For bonus points, categorize those steps into their appropriate AARRR (acquisition, activation, retention, referral and revenue) buckets.
As an analogy, consider the petrol-powered car. The concept is simple: Fuel goes in and there’s some combustion, which propels the car forward. The inner workings of this process that have been refined since 1886 are largely unappreciated by most people. For some engineers, however, it is pure genius how several small inventions have been carefully assembled to make it work.
The mechanics of startup growth are similar: It takes persistence and patience to piece together the parts that make a startup successful. Unlike in Henry Ford’s time, however, the parts are relatively easy to come by. There are an abundance of case studies and blueprints to draw on. This is why a startup can’t be judged by its parts alone but rather by how they fit together and what they produce.
Highlight your key growth metrics
Consider highlighting metrics that are relatable to an investor when referencing the stages in a customer’s journey the metrics apply to. Tying metrics to stages in the customer journey can be an illuminating exercise that may answer key questions like:
- How long does it take to close a lead?
- What levers do we have to impact revenue per transaction?
- Is our funnel optimized enough to accommodate low-intent, paid traffic?
- Where are we bottle-necked by a lack of available resources?
It makes sense that if your customer journey metrics are trending in the right direction, you’re probably growing. However, you still need to draw a correlation between customers passing through your journey and the outcomes you’re hoping for (that investors can relate to).
This is why customer journey metrics go hand-in-hand with common growth metrics such as customer acquisition cost, daily/weekly/monthly active users and monthly/annual recurring revenue. These sum up how effective your growth machine is, just as cars are judged by how quickly they accelerate from 0 to 60 miles per hour.
“What gets measured, gets managed” holds true. For investors, it’s a rare treat to see an obsession with the granular metrics of a customer journey. It shows textbook growth discipline — measured iterations in many areas can make for compounding returns.
Prove your team has a clear growth-first mindset
No one expects early-stage startups to have all their parts figured out or have major efficiency gains right around the corner. After all, this is what makes entrepreneurship a rollercoaster ride of challenges and rewards.
At a high level, disciplined growth is about narrowing in on one opportunity at a time and investing resources into making it as efficient, scalable and cost-effective as possible. This is why mature companies will often assign task teams to focus exclusively on areas such as onboarding, checkout or retention. Several small improvements equal big, compounding growth.
Startups that have a growth mindset typically have three qualities:
- A team that is focused and oriented around results.
- A culture of continuous improvement.
- Decisions that are driven by data.
The TL;DR
It feels like winning the first prize when you see a startup that acknowledges every stage of the customer journey and can then project what would happen if it were to improve or accommodate more customers. This draws a direct connection between investment and a hoped-for outcome. What’s more, the right investor would be able to see an opportunity that adds further value and have an idea of how to capitalize on it together.
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