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Investors are more than a source of capital. They have experience, advice, and networks you can leverage. It’s normal to feel intimidated by the people who just handed over a check, but it is vital for both parties that you tap into their knowledge to build a strong business. As soon as you take on capital, you are expected to work toward generating returns for your investors. On the flip side, an engaged investor can add value to your business in order to help generate those returns. That said, you are likely not their only investment, so you need to show them you value their time by only asking important, specific questions. When asked about the most important section of his investor updates, R.J. Talyor, Founder & CEO of Pattern89, said “In the Visible Update template I use, there’s a specific section named ‘Where I need help,’ where I list the 2-3 places that Quantifi needs new thought/idea/feedback on what we might do next. I always get responses from this section—introductions to potential customers, books/resources I should consider, or a quick phone call to talk through the area I’ve outlined.” So what’s appropriate to ask your investors? And how do you do it? You’ll find most asks go back to their experience and network. How to Ask Investors to Help With Closing Deals At its core, building a VC-backed business is about generating revenue. The biggest value add for a business? Closing more deals. Your investors are in the “deal-making” business and likely have a knack for closing deals. Use your investors professional networks to make an intro, set a meeting, or bring in the necessary backup to close a large deal. If you see your investor has a specific connection you’re looking for, don’t beat around the bush. Ask the investor for the exact intro you’re looking for and tell them how they can be of most value. Don’t make the mistake of asking for help on a deal once it’s too late. As Paul Arnold from Switch Ventures, puts it, “A surprising number of founders only want to update investors once they’ve closed deals. They worry that they’ll look bad or weak or behind if they share leads that don’t convert. This is a bad approach. Your investors have the experience to know that not all leads will end in a deal”. How to Ask Investors to Help With Hiring Attracting talent is one of—if not the—most important resources businesses compete for on a daily basis. Using your investor network is a great place to start when searching for a new role. While they are often best suited to help fill senior positions, be sure to ask your investors for help when recruiting for any open position. Be sure to specific as possible about the role, as well as items like the experience level required, and target compensation,to make it low-maintenance for your investors. If you have a larger firm backing you, theres a chance they have an internal talent pool from which to pull qualified candidates. How to Ask Investors to Help with Fundraising Investors know other investors. Even if your investors are not interested in committing follow-on capital, they may be able to introduce you to other investors they know. Just as you should with making hiring and deal ask be sure to be as specific as possible, even giving your investors the name of the firm and partner you’d like to meet when possible. If you’re struggling to find specific investors, it is okay to ask if they know anyone in their network that might be a good fit. Whether asking for help to close deals, hire, or fundraise, your best bet when going to investors for help is to communicate clearly and often. Speaking up only when you need help isn’t likely to get you the results you’re looking for. Remember to reverse the relationship, too—help promote an event, send deal flow, and help other companies in your investors’ portfolios. Lastly, don’t forget to publicly thank your investors when they go above and beyond. Leveraging your investors is low-hanging fruit for moving the needle. Don’t leave your investors in the dark; send regular updates so you can make the most of your partnership.

In the words of AngelList Founder Naval Ravikant, “It’s never been easier to start a company. It’s never been harder to build one”. The competition for capital and talent is greater than ever. On top of building a great business, obtaining capital to grow your business is tough enough. From countless cold emails, meetings, and rejections fundraising is a long, often daunting, task. While most founders don’t have the fortune to 100% focus on fundraising, creating a simple and efficient process can be the difference between a successful or failed raise. We’ve laid out 3 tips below to help simplify the fundraising process so you can stay focused on your day-to-day: Do Your Homework Before Reaching Out Before you send an email to a perspective investor make sure you’ve done your research. There is no reason to spend time on an email or sitting in a meeting with an investor and find out after the fact that they’re not a good fit. Mark Suster, Managing Partner at Upfront Ventures, suggest building a list of 40 qualified investors before firing off your first email. Use tools like Crunchbase and AngelList to easily put together a list of qualified investors based on their location, industry focus, stage focus, portfolio companies, and deal velocity. Track Your Interactions During the fundraising process theres a good chance you’ll talk to 100+ different investors. Its easy for conversations and notes to get lost in the shuffle. Just as you would jot down notes and the information for a sales process in your CRM the same should be said while fundraising. We suggest creating a simple Google Sheet tracking the investors you’ve spoken with, information shared, and relevant notes/recordings/etc. If necessary, share the sheet with your co-founders to gage the team’s sentiment towards different investors and meetings. This will come in handy when its time to fundraise down the road and need to pull on previous conversations. Go to Existing Funders First If you have already have investors you will want to start here. If you’ve kept your investors in the loop, a request for a meeting should be an easy string to pull. As Jason Calacanis puts it, “There is another really awesome reason to keep investors updated: they didn’t give you all of their money — they have more! They want to give you more! If you keep your investors engaged with honest updates they will reward you by participating in future rounds”. If for whatever reason your investors are not going to fund a future round they will be able to make intros to other, already qualified, investors as well.

From working with hundreds of founders we often hear, “what metrics and data should I be sharing with potential investors?” With droves of content laying out what you should and should not share before an investor meeting it can often complicate the process. To some investors, a “data room” and certain metrics are vital but the opposite can be said for others. Despite the difference from investor to investor there are a few traits most will keep their eye on during the fundraising process: Market Data Don’t reinvent the wheel. When you’re pursuing a specific industry or market, there are generally benchmark numbers and stats standardized across the industry. Share these projections, benchmarks, and stats with prospective investors and paint a picture of the potential market and how you will use their capital to penetrate the market. If you’re targeting the right investors they’ll likely have experience in the field and should already have a deep understanding and belief in the market. Growth To get your foot in the door, you’ll need to show some kind of current growth and traction or the potential for growth. This more often than not comes in the plan of a business/financial model and historical data (which often ties into the market info above). At the end of the day, an investors job is to generate returns on their investment. Show them a strong financial model that creates growth for the business and returns for them and their LPs. Some investors and founders make the case that you should be careful in how granular you get with the model you’re sharing as it can often lead to unnecessary questions/confusion. As Tommaso Di Bartolo wrote for Startup Grind, “Using excessive metrics can lead to unnecessary discussions that don’t matter at an early stage”. Related Resource: What Should be in an Investor Data Room? Unit Economics & Margins Margins on your product is a large part of the path to profit and returns for your investors. Margins are easily benchmarked by industry. Investors generally have a % they are looking for in the back of their mind. For example, a SaaS business should have no less than 60 or 70% gross margins. As Tim Anglade of Scale Venture Partners puts it, “If you’re really not able to capture a margin on your current pricing now, it’s unlikely to change in the future, right? And you’ve got to stay within a certain benchmark to have a good business”. Customers Your customers are your business. Clearly showing potential investors that you can attract, convert, retain, and engage your customers is vital. Being able to show proof of repeat and loyal customers will help ease the mind of investors. This can come in the form of customer satisfaction surveys, net promoter score, and retention rates. Related Resource: A Guide to Building Successful OKRs for Startups

A guide to avoid the common mistakes and capitalize on opportunities with your new reps written by Brock Benefiel. Brock is a Digital Marketing Consultant, Tech Writer, and Author of the upcoming book Flyover Startups. Because they are often the least experienced group working in a tech company (or working at all), SDRs are some of the hardest employees to train. And in the short-term, they are some of the least valuable employees to train and will only be a cost burden on your company in the early days. “The average new sales rep at a SaaS company takes 5.3 months to reach full productivity,” Steli Efti writes. “That’s almost half a year where your business is actually losing money per rep.” Yikes, right? But unless you’re entirely new to sales development, you know SDRs work as a long-term investment if given the right environment and proper management. If you can afford the necessary months to pass before they become meeting-setting machines, you’ll eventually develop a crop of SDRs that kickstart huge deals and fill a much-needed talent pipeline that your company will rely on for future hires. So will the amount of onboarding and ongoing training still seem inefficient and sometimes a waste? Absolutely. But it will also pay off big in the end. Its importance is critical. Remember, it’ll always be more costly to have high SDRs churn rates than it will be to allow time for SDRs to train. If you train well, you’ll have set the SDR on the right track and develop a knowledge base that can be returned to the next crop of reps and lessen the burden on your executive team to train in the future. Proper onboarding will reduce the time to full productivity. It’s the best way to do it. But too often onboarding mistakes are made and training opportunities are squandered. Don’t fall victim to these silly slip ups. Examine these top errors founders make when bringing on new reps instead and learn how to avoid all of it with effective training strategies: #1 – You push them too quickly into the deep end This is the easiest mistake to make. You want to get your SDRs calling and emailing quickly so they get professional experience but there is just so much they need to know before they can effectively prospect. Here is just a sample of what they need from you in order to better understand your customer: Customer profiles – Who are you selling to in your total addressable market (TAM)? How do these companies specifically benefit from your product offering? Customer personas – Who are your SDRs going to reach out to? What is their job title and responsibility and how does this product specifically make their life easier and solve a big issue they face? Influencer profiles – Who else is important at the company? Who are the additional stakeholders they should consider and what might their role be in the buying process? Here is just a sample of what they need from you in order to better understand your company: Team structure – How is sales broken down? Are SDRs reporting to marketing or sales? Who will they need to report to and who else will they work with? Sales strategy – Are you inside or outside sales company? Are accounts owned by geography or by individual companies? Key metrics – What are the KPIs SDRs will have to hit? Then, you’ll want them to understand the market as well. Be able to answer these questions: Who are your competitors? How is their product offering different? What should be their answer when a prospect asks “why should we pick you over X company?” After that, you will want to demo your product to each SDR and allow them to use it. You also want your new hires to sit down with an individual from each department – engineers, product managers, marketers, salespeople, etc. – to understand the role each play in the company, how everyone plays a role in software development and sales and how each find individual value in your product offering. These conversations provide a deeper understanding of how the product works, why its valued and creates a forum for SDRs to have their first long-form discussions about the company and make them feel more comfortable once they must have these conversations with prospects. Let them first understand what it’s like to be sold and allow them to experience the product education. Have them mark the questions they have in the process so they know to anticipate the same inquiries when they’re the ones who are explaining the product. If you’re not at least providing them this baseline understanding of your company, their customers and their role, you can’t expect them to set meetings. Push them in without this initial training and they will inevitably sink. #2 – You’re going to give them too much information No matter how good you are at training employees, you are bound to overload your new SDR hires with information. Expect them to retain just a fraction of what they’re initially taught. Instead of hoping they’ll be able to consume the firehose of information, rely on ongoing training to make up for what they’ll inevitably miss. “Create a training manual that’s part sales script, part objection management document,” Steli Efti writes. “Your sales training manual allows you to build a more scalable strategy for onboarding new sales hires, by getting everyone to speak the same language from day one.” There is also only so much information you want SDRs to learn before they actually deal with customers and experience the real nuances of the role. In the ramp up period to full efficiency, you want a back and forth to occur between the ongoing education SDRs need and the real life experience they require to get a feel for the customer communication. Your reference materials will SDRs something to study when they encounter more specific obstacles with potential customers. According to Efti, here are some aspects you want to include: 10-15 customer FAQs 10-15 common objections Short answers to each question or objection Your SDRs should study the questions and answers. You should test them on it. Find out what concepts are more difficult to comprehend and go over it again. The more repetition in answering the same questions the shorter the response time will be. The faster the response time the more natural a rep will seem on the phone. The more natural they feel the more they will listen and begin to discover how to address the unique concerns of a customer and set meetings. If instead you overload them with lectures and manuals that don’t allow them actual practice, you will paralyze your SDRs once they’re tested. Use these proper strategies and you will actually provide experience. #3 – You don’t put the same amount of resources into onboarding that you do hiring It’s easy to pay lip service to the importance of onboarding, make an onboarding hire and assume it will work as an isolated activity as part of the new employee process. Check yourself instead: are you devoting the same amount of employees, time and money toward onboarding as you are hiring? Is training and developing talent as crucial as identifying it and reeling it in? It needs to be. Think of it this way: you wouldn’t devote all your resources to SDRs and AEs to find good clients only to underdeliver on customer success and watch an unnecessary and expensive client churn. You wouldn’t avoid upselling a client that needs a better offering, so why would you stop from developing a mid-level performer into achieving more? If you find yourself instead with a balance of how SDR talent is acquired and developed, you’ll earn greater retention and see faster results. Other articles Brock has written about SDRs: Why SDRs fail How to set up a system for SDR success The importance of SDRs

Last week, we wrote about the parallels between a traditional sales & marketing process to a fundraising process. This week we’ll take a look at going from prospecting potential investors to attracting potential investors and moving them through your “investor funnel”. In its simplest form, a traditional sales & marketing process can be broken into 3 steps: Attracting and adding qualified leads to your top of the funnel on a regular basis. Nurturing and moving the leads from through the funnel with the goal of closing them as a customer. Servicing customers and creating a great experience until they become evangelist or promoters. You can easily translate the 3 steps into a similar system for fundraising: Filling the Funnel Unfortunately, qualified investors don’t automatically appear at the top of your funnel on a daily basis. On top of building a great business that investors will want to invest in you’ve got to make sure you’re doing everything in your power to pull investors into your funnel. Networking and email campaigns are key when it comes to filling the top of your investor funnel. Don’t be afraid to email or meet with an investor even if you’re not actively fundraising. Share your big-wins, losses, key metrics, etc. with your list of prospective investors to build trust and a long-term relationship. Jason Lemkin of SaaStr suggest making a “new VC quota” a part of your day-to-day job; “Meet that junior VC, that out-of-towner… Take that meeting with the guy that’s ‘a big fan’ if that’s your best investor meeting idea for the week, even if you know he doesn’t really understand what you do. It’s a quota. Take the best prospect you have, and either work that deal … or spend the hour prospecting to get another deal, another VC “. Nurturing & Moving Through the Funnel While you may not be actively trying to close new investors and add capital you should constantly be working the top of your funnel. Business plans change, investor interest wanes, and a slew of “maybes” and “no’s” will land in your inbox at crunch time. Meeting with investors only when you need capital likely won’t do the job. Staying fresh on the mind of potential investors 365 days a year using traditional marketing tactics (email drips, common networks, social media, PR, etc.) will pay dividends when its time to pull the string on a new round of capital. Set up a “drip campaign” to share updates with your potential investors on a monthly basis. We have found it best to send out a short update on the state of the business and industry. Share a promising metric or two showing strong growth in the business and any significant wins/improvements. Current Investors All new fundraising roads will lead to your existing investors and relationships. Customer success is key to maintaining a strong relationship with customers once they reach the bottom the funnel. The same can be said for your investor funnel. As Jason Lemkin puts it, “If your existing investors, even if they are angels, small VCs, whatever … don’t give you a 100.0000% positive reference … you may be dead in the next round. If I call up your existing angel investor, and she pauses when I ask what she thinks of you and the company … as a prospective investor for the next round, I’m probably out. Done”. So how do you make sure your investors are cheering for you? Just how you would service a customer to turn them into a promoter or evangelist: Invest in Investor Updates – Build a cadence and keep updates succinct as well as comparable. Consistent communication builds trust and keeps you on top of mind for your investors. Transparency & Candor – While driving an internal culture of candor results in better decisions, execution and output, the same can be said when communicating with your external stakeholders. At the end of the day, your investors have been in the same situation and are there to help you through “the struggle” or better yet, help you get to the next stage in your business. Respect their Time – Your goal should be to give your investors the ability to make the largest impact on your business with the least amount of exertion. When you are seeking advice or introductions, be specific. Find new investors and manage your fundraising with Visible Connect:

Raise capital, update investors and engage your team from a single platform. Try Visible free for 14 days. CEO Friday Note Successful companies come in different shapes and sizes yet they often share a few key traits. One of which being regular and open communication. Dig into any great leaders, past and present, and you’ll notice most (if not all) have created some type of management system that allows for open and regular communication. Whether it be Marc Benioff’s V2MOM, Scott Dorsey’s “Friday Note”, or Kyle Porter’s Weekend Update communication can also come in different shapes and sizes. As ExactTarget scaled from a small startup to hundreds and thousands of employees it was no longer feasible for Scott Dorsey to stay in touch with everyone. His answer? The Friday Note. In an interview with Chip House of Structural, Scott Dorsey had this to say: “I started officially sending out my ‘Friday Note’ in 2009 and never missed a weekly email for over five and a half years. It was a simple and very impactful way to highlight accomplishments for the week and keep the lines of communication open with our 2,000+ employees. It showcased the transparency in the company and helped us keep our unique ‘Orange’ culture as we scaled the company — one of the defining factors to our overall success at ExactTarget.” Weekly team Updates are a quick way to share your company vision, rally around goals, and stay aligned as the team continues to grow. On the flip side, weekly Updates tend to help CEOs and leaders stay on top of the business. As Kyle Porter puts it, “Personally, writing this email helps me better understand the state of the business. It also helps everyone else stay in the loop so they can help out where needed and not lose track of our direction.” We’ve pieced together an Update Template from different methods and styles used by leaders like Marc Benioff, Scott Dorsey, and Kyle Porter. Once you’ve dialed in your style and format you should be able to crank out a weekly Update to your team in 30 minutes or less!

A post by Brock Benefiel. Brock is a Digital Marketing Consultant, Tech Writer, and Author of the upcoming book Flyover Startups. Everyone finds time to talk up culture. You can find literally tens of millions of articles preaching the importance of establishing the right startup culture and enforcing it. If you’d like, you can spend endlessly amounts of time reading up on it and hear over and over again why it matters. But you’ll never have enough time to talk to your investors about culture. Instead, you’ll be forced in board meetings and company reviews to get straight to the point if you want to convey what’s important about your all-important company culture. So speak the language of your investors: use metrics, cite examples and show change. Your passion for your startup’s culture will be visible on your face and 80% of culture is expected to come from the founder. But your strategy for culture and any changes along the way should be put on paper and pushed in front of your investors regularly. Then, no one will be able to question its importance. So, how do you concisely and effectively communicate to your board that you’ve adequately defined your culture and have made it a successful one for your business? Use these strategies: Employee NPS scores If it’s works for customers, if we advocate it for investors, then don’t second guess the power of NPS when it comes to addressing the need for a quick and easy gauge on employee satisfaction. NPS is a hard metric and one that you can track, share with investors and work to improve. You company reviews are loaded with growth stats and NPS fits in nicely among the bunch. At HubSpot, they dig into the raw data from overall NPS and segment scores by department, tenure of employee, office location and gender in order to spot specific problem areas. Then, they can reach out to groups of employees most likely to be unsatisfied and find reasons for their disapproval. Hand the overall and segmented NPS numbers to investors and you’re already have shown your testing your employees on their satisfaction. “The employee Net Promoter Score is by no means a comprehensive way to measure employee engagement,” Jamie Nichol writes in CultureIQ. “Instead, it serves as a useful metric to track at a regular frequency over time.” NPS will never tell you the full story. But it’s a hell of a way to start the conversation. Problems solved “Even if the founders have invested a lot of time instilling culture into their core team, as the company scales and silos naturally form, negative culture can take root and easily get out of control,” Eric Blondeel and Moufeed Kaddoura contend in YCombinator . Your investors aren’t going to expect a flawless office environment. But they will expect a founder to be the one to quickly recognize the inevitable culture problems that arise and fix them just as fast. Your reviews and board meetings are great opportunities to cite specific examples of something that went awry and quickly explain the solution. Attacking it and fixing it shows you have your finger on the pulse of the company’s culture and can handle things as you scale. That’s a qualitative case of both founder and startup growth and investors will always care about that. The culture elevator pitch You are bound to grow a culture that is nuanced, complicated and worthy of long, flowery descriptions. But you need an elevator pitch for culture – have a few succinct examples of what makes your startup great. “You want people to say your startup is different from everyone else. But in what way?” First Round Review notes. “Figure it out early.” These takeaway examples serve as talking points for your investors. They are conversation starters when mentioning your business to potential investors, customers and employees. It’s also proof on your end that you care about culture and possess the ability to make it distinct. In his reflection five years after he sold the company, Eric Tobias can name specific aspects of his former company’s culture that made the business what it was and why it can be easily commerated no much how much time has passed. Culture is best when it’s sticky and easy to explain to anyone. Talk one-on-one meetings Have a meeting and talk about other meetings. How sexy?! How meta?! Okay, it sounds a bit ridiculous. But any good business treasures one-on-one meetings. They make one-on-ones a priority and have the leadership team spend these sessions asking detailed questions to find out what employees like and what’s frustrating them. These frontline efforts are key to getting a sense for your startup’s culture and how to improve it. If you need a helpful set of feedback questions, YCombinator has one here. Let your investors know you have a process in place that allows your managers to monitor the company’s culture and another measure to spot problem areas before they get out of control. Retention rate Finally, a simple but essential one. If you’re sharing your retention rate, your investors will appreciate the transparency because this can be an uncomfortable one. If your retention rate is low, you’ve got a culture problem on your hands. Either you’re not providing a valuable experience for the employees that are heading out the door or you haven’t defined culture well-enough for hiring managers to know how to spot it in potential employee interviews. A drop in employee NPS can be the canary in the coal mine but if retention rate plummets that’s when the emergency alarm goes off. Show your investors you’re monitoring it closely and prepared to act if you’re experiencing unnecessary churn.

The SaaS industry has experienced rapid growth in recent years. With industry expansion comes expansion in all facets of the market. More data, resources, blog posts, thought leaders, ideas, than ever before. While there are great resources being shared on a daily basis there are also equally poor resources being shared on a daily basis. So do how you filter the signal from the noise? Why do SaaS Metrics matter and what should you be tracking? SaaS companies are inherently driven by data and metrics so common SaaS metrics benchmarks and metrics are starting to become more common across the industry. With hundreds of venture firms focusing in SaaS, many have started to share their findings to continue to spur growth in the industry and increase the quality of early stage SaaS companies. SaaS Metrics Benchmarks Comparing your company to the others around you is one of the best ways to ensure that you are on the right track with your SaaS metrics. Being a SaaS startup founder can often feel like you’re alone in the journey so being able to stack up against other using SaaS metrics benchmarks is a must. One of our favorite SaaS metrics benchmarks is the annual metrics benchmark from the team at OpenView ventures. We’ve partnered with OpenView to send their survey to 400+ SaaS companies on an annual basis. From here, the team takes a look at the data and uncovers underlying trends and directions in the market. We specifically love this SaaS benchmark because it shows vital SaaS metrics broken down by company size. It can be intimidating comparing your data to powerhouses like Slack or Salesforce so the OpenView SaaS metrics benchmarks allows you to compare yourself to companies at a similar stage. Another great SaaS metrics benchmark is from Christoph Janz of Point Nine Capital. Every year, Christoph puts together a SaaS funding napkin. The napkin is a breakdown of SaaS metrics and benchmarks the data a company needs to hit to raise a seed, series A, series B, etc. Generally, Chrisoph uses revenue, team, product/market, sales/marketing, and the companies’ moat to benchmark what it takes to raise at different stages of a company lifecycle. No matter what source you use, finding a quality SaaS metric benchmark will greatly help in your journey to scale the company. While no company or founder is the exact same, having a benchmark to turn to will help shine a light at the end of the tunnel.

The job of a marketer is to assist a sales team in generating new leads and in turn generating new customers. In order to measure the effectiveness in closing new customers teams have to implement marketing scores across the organization to measure and iterate on their efforts. Marketing scores can be used across your sales and marketing funnel to improve conversions across the board and spur growth with small tweaks. Especially for a SaaS business, measuring your SaaS metrics and marketing scores can be easily replicated across the funnel and shared throughout your organization. You can check out the 3 marketing scores we suggest starting to track below: Qualified Marketing Traffic In its simplest form marketing traffic is anyone who has visited your website. The greater number of people who visit your website and are aware of your business the greater number of opportunities you have to produce customers. However, not all marketing traffic is created equal. Depending on where your traffic is coming from it may have a varying level of qualification. Qualified Marketing Traffic is anyone that would be considered qualified to buy your product or service. For example, if you’re selling grass seed, someone who is googling where to buy grass seed would be more qualified than someone that found your site googling what kind of grass is used at a golf course. Qualified Marketing & Sales Leads The next step in the sales funnel is generating qualified leads. Once we have found what qualified marketing traffic looks like it is time to qualify them a step further and turn them into a lead that can be turned over to sales. The more qualified the marketing traffic the easier it is to turn them into a lead. Depending on what your product or service offers, generating leads may be a varying degree of importance. If you have a longer sales cycle with more touch points it may be more important to create a lead and establish a relationship than a company with a shorter sales cycle that is a quick and easy purchase. Lead-to-Customer Rate The last of the marketing scores that we have is the lead-to-customer rate. Simply, this is the rate at which you turn leads into customers. This marketing score is touched by both sales and marketing teams. If marketing is turning over low quality leads the lead-to-customer rate will likely be low. If sales is not speaking to the same message that the marketing team is using this could also lead to a low lead-to-customer rate. The good news, while many aspects have an impact on the LTC it is easy to make small tweaks to increase the rate.

As we’ve discussed before calculating your quick ratio is an easy formula to understand how efficiently your company can grow. The higher the quick ratio the more efficient a company can grow. An example quick ratio formula can be found below: Quick Ratio Formula = (New MRR + Expansion MRR) / (Contraction MRR + Churned MRR) In addition to the quick formula, we see many startups track two other financial ratios: current ratio and liquidity ratio. Tracking different financial ratios can be an integral part of a companies’ success as they offer a quick and easily digestible way to understand where your company stands. Where a quick ratio observes your short term financials, the current ratio and liquidity ratio observe all of your assets and long term obligations. Liquidity Ratio Liquidity ratio or liquidity ratios are often seen in a similar sense as a quick ratio and can be used as an umbrella term. Both quick ratios and current ratios are a different form of liquidity ratios. According to Investopedia, “Liquidity ratios are an important class of financial metrics used to determine a debtor’s ability to pay off current debt obligations without raising external capital. Liquidity ratios measure a company’s ability to pay debt obligations and its margin of safety through the calculation of metrics including the current ratio, quick ratio, and operating cash flow ratio.” Related Resource: From IPOs to M&A: Navigating the Different Types of Liquidity Events Liquidity ratios are important to startups and their investors because it helps determine if a startup can meet their current debt obligations. Current Ratio As mentioned above, a current ratio is a form of a liquidity ratio. A current ratio is a longer term look at a companies’ debts and assets. The current ratio formula is very simple and can be found below: Current Ratio Formula = Current Assets / Current Liabilities While different companies may interpret what counts as an asset differently, a current ratio of 1 is generally accepted as a good current ratio value. Whereas a quick ratio often observes just your recent revenue, a current ratio takes a holistic view at all of your assets and liabilities which causes a bit more variance from company to company. All in all, tracking your liquidity ratios (current ratio and quick ratio) can offer both startup leaders and investors a high level view of the companies ability to grow and cover their debt obligations.

The SaaS Quick Ratio is a simple formula used to measure the efficiency of your SaaS company’s growth. A quick ratio gives a company a reliable source to predict how they can grow revenue with churn in mind. In short, the quick ratio formula is new MRR by lost MRR over a period of time. The higher your quick ratio the stronger the growth. The quick ratio formula can be found below: Quick Ratio Formula = (New MRR + Expansion MRR) / (Contraction MRR + Churned MRR) A low churn rate is often the most efficient way to grow your SaaS business. While new MRR is vital to a company’s success as well, a high churn rate will make it virtually impossible to have a sustainable growth rate. As Tomasz Tunguz puts it, “If the churn number is unsustainably high, we know from previous churn analyses that high churn implies lower growth rates and dramatically less efficient growth.” While a high MRR growth rate can mask a high churn rate, the best-in-class companies always have a low growth rate, creating a much higher quick ratio. Quick Ratio Formula in Visible Creating a quick ratio formula in Visible is incredibly easy with our formula builder. First, you’ll want to make sure you have your recurring revenue metrics in Visible. We would suggest using user provided metrics or using Google Sheets, Salesforce, HubSpot or ChartMogul to automatically get your recurring revenue metrics in Visible. Once your metrics are in Visible, you’ll want to start building your quick ratio formula. To start, add any new and expansion MRR metrics in the top line. For our quick ratio formula we only mention MRR and Expansion MRR but this could include reactivated, multiple product, etc. On the bottom row, you’ll want to add any “loss” MRR metrics, like contraction and churned MRR. After the quick ratio formula is setup, it will automatically be calculated as any new data comes in from your integrations. Next, you’ll want to visualize, distribute, and act on your quick ratio. We suggest sharing your quick ratio with managers and executives on your team so everyone has an easy way to understand the growth of your company at a quick glance. Generally, we do not see companies share their quick ratio with their investors as if you have a down month or period it may display poorly and generate unnecessary concerns. Tracking your quick ratio is a great way for SaaS companies to get a quick idea of how efficiently they are growing. The easiest way to strengthen your SaaS quick ratio is by shrinking your monthly churn rate. Learn more about your quick ratio here.

A post by Brock Benefiel. Brock is a Digital Marketing Consultant, Tech Writer, and Author of the upcoming book Flyover Startups. Recent high-profile tech controversies have put ethics under the microscope. What role do investors play in a company’s values and how do you fill your boardroom with people on your side? As a founder, you own the values of your business. You may not own all the shares of the company but the ethics and guidelines that govern your startup will always be your responsibility. You’ve got to protect what you’ve created so it’s necessary to do what you can to assert your control. This can cause some real headaches if you’re forced to grapple ethical dilemmas with difficult investors. Founders may find themselves with financial backers that are eager to buy-in to a company for its products or services but later seem easy to dismiss your values. That’s a problem. A founder serves as the ultimate arbiter between the needs of the customers, employees, executive team and the board. The moral framework they construct for guiding their business is often a valuable structure for producing the best possible company to serve everyone’s needs. On the hand, if they are tempted to make unreasonable short-term ethical concessions for a quick surge that sacrifice a long-term vision for growth, everyone is vulnerable to lose in the end. There is real pressure on founders to be unethical “Startups are desperate,” Sean Ellis, CEO of collaboration software startup GrowthHackers, told Fortune. “[Mature] companies aren’t going to die if they don’t figure out how to accelerate growth. Most startups will die, and when you’re desperate, you’ll do stupid things.” There’s no shortage of news (see Theranos, Zenefits, Hampton Creek) of young companies fudging numbers, falsifying product details and generally doing stupid things. Reputations have been wrecked, businesses cratered and the opportunity to accomplish great change have been squandered by these shortsighted snafus. But any venture requires even honest tech founders to be irrationally ambitious. Getting investors to dole out money now requires convincing them to buy into a future founders can never be sure will ever exist. Then those checks cash and the pressure to show growth quickly and turn that vision into something tangible soon intensifies. But real, sustainable growth is hard and cutting corners can be easy and attractive – especially when the stakes are high. If you’re a founder that lacks a rigid moral framework for how you conduct business, you’re likely to choose the initial path of least resistance that gets your startup moving quickly. It’s also the course that can later lead you to hitting the wall and going down in flames. Venture capital dollars don’t optimize for ethics either VCs face pressure too. They need at least one massive hit out of their profile and have less time for your business and if you’re unlikely to earn it for them. Founders often expect their investors to also serve as mentors. But if your backers are picking up a pen, it’s to write a check not draft your company’s value statement. This quote from Fred Destin nails the limits of venture capital as a moral authority for your startup: “Venture capital as a funding product is not immoral as much as it is amoral — it rushes in to leverage any opportunity that arises,” Destin wrote recently in Medium. “The individual themselves are mostly (in my experience) of high integrity and have a clear moral compass, but I don’t think many venture partnerships stop to think : “why are we funding this team and can we embrace the mission of this company.” Let’s face it: the focus of VCs is fetching a 10x return on their investment. Anything else is a bonus for founders. Set expectations early But investors should be asking the “why” questions of your business. It’s remarkably short-sighted to sign a term-sheet and shell funds into a company without a clear understanding of what the company values. You can’t control what they choose to ignore. But you do command their attention in pitch meetings and you can emphasize from the jump how your ethics will guide your business. “You need to be upfront about your values,” Brad Burnham of Union Square Ventures said about founders. “You need to implement your values in your system.” State it explicitly and explain to investors exactly what they are signing on to beyond the term sheet. Then, if problems arise later, you’ve already set the precedent and make the investors choose to be the problem. The burden will be on them to explain to you and the rest of the board why they’ve done it. You offer a lot upfront – so ask a lot upfront Pitching investors is a trust exercise all of its own. You’re almost always sharing proprietary information in an investment deck and almost never securing a NDA to prevent potential VC vultures from flying away with your secrets. If you’re willing to easily hand over precious data points and secret product information, you’ve earned the right to demand investors take your code of ethics seriously. Investors have expectations of you too Younger CEOs and first-time founders are especially vulnerable to an extra bit of skittishness to appear disruptive or cause unnecessary board drama. You’re entering a boardroom with investors that have likely worked with multiple founders and you might even outnumbered by VCs in the room. Address concerns that may not immediately impact growth in front of a group focused on earning a return can be awkward. But it’s good and fair to establish early that you have expectations of your investors, especially when they’ll certainly have expectations of you. Ask investors for their code of ethics Same as founders, good VCs consider the culture they want to create within their firm and consider how it guides their decision to invest. Some have even argued for a kind of Hippocratic Oath for VCs to take. An investor who hasn’t already spent time weighing moral decisions and etching out an ethical framework for acceptable and unacceptable practices will be surprised when challenged by founders down the road. Same as founders, it’ll be hard to expect a move toward the moral decision over the quick growth compromise. Ask your investors upfront for their guidelines. In absence of something written, ask them direct questions about why they pick the startups they do and what they value. They might not be prepared to deliver long, well-considered answers. But even that can reveal a lot. So you’ve vetted investors well and delivered your point-of-view upfront, but yet problems still arise. What do you do? Keep the board behind you VCs are human too and when the pressure is on, can be vulnerable to advocate for unethical shortcuts. You’ll have to address it with the individual causing the problem immediately – part of good investor communication is telling VCs when they are wrong. If you reach an impasse with the troublesome investor, you’ve got a problem that needs to be solved with the entire board involved. If you feel your company is about to behave unethically, it’s time to rally the other investors (and the votes) behind you and pressure the problematic VC to back down. Do it out in the open in board meetings or do it behind closed doors. Honestly, it doesn’t matter if you’re airing the issues out in front of everyone or pressing VCs for loyalty pledges in one-on-ones. Investors are there to have your back and if they don’t back you on these conflicts, they are skirting their duty. Implicit pressure can be unethical An investor might act unethically by asking you to engage in a task or behavior that you deem unethical. But your board can also be guilty of implicit abuse of your code of conduct. You can’t acquire new customers, boost revenue growth or makeover your product offering at the expense of your company guidelines. You don’t want to deploy shady tactics to show artificial sales spikes or to fudge timelines of when enterprise features will be implemented just to win now. However, if you don’t have a group of investors that respects the limitations of your current growth or brings sound solutions to the table that empower you to step beyond your boundaries, you have a group of people who unnecessarily pressuring the person in charge. That might not be as sinister as suggesting immoral actions, but it can lead a founder down the wrong path all the same. You don’t want these people as your advisors. So, to return to the question asked up top, do you need investors to match your values? Yes – at least as it relates to the core tenants of your business. It’s not that complicated. Keep it clear early what you value and why it matters. And if it gets complicated, keep it simple with your current investors (at least the ones that will get it) to ensure everyone stays on the same page.

QuickBooks Report Template In the words of Tomasz Tunguz, Partner at Redpoint Ventures, “Financial statements are the Rosetta Stone for a business. They are the most succinct way of communicating how a business operates to management teams and boards, who weigh the trade-offs of different investments”. Distributing your financials to your team, investors, and board is vital to staying on top of your operations and uncovers insights for bringing a new product or service to market. Using our Quickbooks data source, we put together an Update template that will allow you to easily visualize and distribute your key financial and operational data. Currently, our Quickbooks integration allows you to pull in the following metrics: Cash Customers Employees Expenses Months Runway Net Change in Cash Net Income Payables Receivables Revenue Check Out the Template Here >>> When sending a financial and operational Update it is important to make sure the information is understandable, relevant, reliable, and comparable. Many team members, investors, etc. are likely not concerned about granular data points but rather that they are moving in the right direction and are efficient as possible. Instead of overwhelming stakeholders with spreadsheets and complicated metrics, we’ve often found that it is most useful to send over a few charts with a quick narrative around what is working/not working/etc. For those looking to take it to the next level, it can be useful to include benchmarks and trends in the industry to show how certain metrics and financials are comparing to the industry as whole. The template is broken down into 3 major components; Operational Overview, Expense Overview, and Other Notes. Keep in mind the financials you are tracking and sharing may change depending on the stage of your company; revenue is obviously not as important for a pre-revenue, early stage company. For our example, this includes revenue, cash position, and a high-level look at company expenses.

The Race to a Trillion Dollar Market Cap Between the unofficial race to the first one trillion dollar company and the recent acquisition of GitHub we decided it would be an interesting time to look at Microsoft’s most recent shareholder letter. Recently passing Google’s market cap for the first time in 3 years their acquisitions and focus on “the cloud” (doesn’t hurt to purchase the company behind the largest repository of open source software) have proved to be a large factor in their push to $1T. All of the charts, images, quotes, and emphasis below were added by us. Note: there may be removed sections of portions of the letter below. You can find the original 2017 Microsoft Shareholder Letter here. PROGRESS AND OUR RESULTS We delivered $90.0 billion in revenue and $22.3 billion in operating income this past fiscal year. Adjusting for Windows 10 revenue deferrals and restructuring expenses, revenue was $96.7 billion with $29.3 billion in operating income. According to Morgan Stanley analyst, Microsoft will need to grow their revenue by 46% to $136B and net income to $46B to reach the trillion dollar threshold by 2020. We continued to invest in innovation and expand our market opportunities, while maintaining our commitment to shareholder return, which included total cash return of $22.3 billion this year. Our commercial cloud annualized revenue run rate ended the year exceeding $18.9 billion, up more than 56 percent year-over-year. Our cloud growth puts us squarely on track to reach the goal we set a little over two years ago of $20 billion in commercial cloud annualized revenue run rate in fiscal 2018. “With Public Cloud adoption expected to grow from 21% of workloads today to 44% in the next three years, Microsoft looks poised to maintain a dominant position in a public cloud market we expect to more than double in size to (more than) $250 billion dollars.” – Morgan Stanley Analyst Microsoft is doubling down on their cloud efforts and are expecting for strong growth with corporate usage for Office 365 and Azure. The strength of our results across our reporting segments reflects our accelerating innovation as well as increased customer usage and engagement across our businesses More than 100 million people use Office 365 commercial. More than 27 million consumers use Office 365 Home & Personal across devices. More than 53 million members are active on Xbox Live. More than 500 million LinkedIn members use the LinkedIn network. Windows 10 is active on more than 500 million devices around the world. Dynamics 365 customers grew more than 40 percent year-over-year. Azure compute usage more than doubled year-over-year. As of June 14, 2018 the market cap for each company is… Microsoft – $783B Apple – $946B Amazon – $832 Google – $806B LOOKING FORWARD: OUR EXPANSIVE OPPORTUNITY A new technology paradigm As you can begin to see in the examples above, a new technology paradigm is emerging, one with an intelligent cloud and an intelligent edge. Microsoft will lead this new era. There are three characteristics that define this shift. The first is that the experience layer is becoming multidevice and multisense, where a person’s experience with technology will span a multitude of devices and become increasingly more natural and multisensory with voice, ink, gestures and gaze interactions. Second, artificial intelligence (AI) will be pervasive across devices, apps and infrastructure to drive insights and act on your behalf. Third, computing will be more distributed than ever before with compute power at the edge, whether it’s the connected car, the connected factory floor or any connected device. As developers write new applications for this paradigm, they need new mechanisms to manage the complexity of distributed, event-driven computing. Microsoft made a big splash with their recent $7.5B acquisition of GitHub. The acquisition stays in line with Satya Nadella’s focus on the cloud and open source projects. GitHub has already had a large presence in enterprise sales with GitHub enterprise and will be able to tap into Microsoft’s massive enterprise customer base. With the continued growth of public cloud usage Microsoft is looking to grow their strong position in the space. With this new paradigm comes new opportunity. Every customer is looking for both innovative technology to drive new growth and a strategic partner that can help them build their own digital capability. Customers are looking to change how they use digital technology and to reimagine how they empower their employees, engage customers, optimize their operations, and change the very core of their products and services. They are building their own digital systems of intelligence to drive growth. Microsoft is uniquely positioned to capitalize on this opportunity with the combination of our technology, partner ecosystem and culture of growth mindset. As we look ahead to fiscal 2018 and beyond, we will focus on bringing our technology and products together into experiences and solutions that deliver new value for our customers. Going forward, we will focus our innovation and investments in areas where we see the greatest opportunity for growth. The modern workplace The workplace itself is transforming — from changing employee expectations, a widening skills gap, more diverse and globally distributed teams, to an increasingly complex threat environment. The productivity experiences and tools we deliver will unlock the creator in all of us and enable seamless teamwork not just in the workplace, but also at school and at home across all the devices people use — from the phone to the laptop to mixed-reality headsets to the whiteboard. The Microsoft Graph, which provides the underlying data model of the user’s experience, and the LinkedIn network, will make it possible for every professional in any business or functional role to be much more productive in getting things done. Enter Office 365, Windows 10, and LinkedIn. Office 365 currently has 100 million users and is expected to double to 200 million by 2020 on top of LinkedIns already 500m users. Applications and infrastructure Cloud computing is foundational to enabling digital transformation for any organization. Beyond being a trusted, global, hyper-scale cloud, what makes Azure unique is our hybrid consistency, developer productivity and SaaS application integration. Our hybrid infrastructure consistency spans identity, data, compute, management and security, helping to support the real-world needs and evolving regulatory requirements of commercial customers and enterprise-focused SaaS ISVs. Azure Stack is an extension of Azure that enables developers to build and deploy applications the same way whether they run on the intelligent cloud or the intelligent edge. With Visual Studio and Azure Services, we provide the toolchain and application platform for modern DevOps that helps organizations with their agility and productivity — and enable them to use the best of the Windows ecosystem and the best of the Linux ecosystem together. Azure enables SaaS ISV developers to reach 100 million plus enterprise users through the integration of Azure Active Directory and Office 365, and by embedding Power BI, Power Apps and Flow as part of their applications, enables customers to have consistent identity, developer extensibility and security across their application portfolio spanning their own custom applications and SaaS applications. Microsoft has doubled down on their cloud investment and are going after Amazon and Google’s cloud services as the market continues to grow. While AWS still has a commanding percentage of the enterprise cloud market Azure has been rapidly chipping away at Amazon’s lead. Azure went from 34% to 45% of the market while AWS still grew from 57% to 64%. The data above comes from a survey by TechRepublic of 1000 technical professionals. Gaming The $100 billion plus gaming industry is experiencing massive growth and transformation, and we have an expansive opportunity as we think about gaming end-to-end — from the way games are created and distributed to how they are played and viewed. We will build on our strong foundation of connected gaming assets across PC, console, mobile and work to grow and engage the 53 million strong Xbox Live member network more deeply and frequently — from great game experiences to streaming to social to mixed reality. We will be the company for gamers to play the games they want, with the people they want, on the devices they want. I’m excited about our opportunity to accelerate our growth opportunity, innovate boldly and earn new fans. Microsoft has been on an acquisition spree in the gaming market. On June 10, Microsoft announced the acquisition of 4 game studios as they continue to innovate and grow their gaming business. Microsoft’s continued investment in Xbox, AI, and live streaming video games have the opportunity to be a large part of their Azure Cloud business.

What campaigns are working? What content is performing best? Where can we improve inefficiencies? Where should we double down? Continuing to review, analyze, and “duct-tape” your funnel is key to executing an agile marketing playbook. “Data doesn’t do you any good unless you act on it. Each of these metrics clearly tells you how you’re doing. Right away, you’ll know where you need to spend your time.” – Andrew Chen, a16z General Funnel Metrics Automatically bring in general funnel metrics using our HubSpot integration. Bring in basic lead counts or use filters to bring in granular funnel metrics to dig into where you can improve the most. You can check out examples for bringing in different pipeline stages below: Different Lead Stages; subscribers, MQLs, SQLs, PQLs, etc. – Start with “Contacts” as your HubSpot Object. Anchor the date to any field you or HubSpot are automatically tracking; create date, became an XYZ date, etc. From here, you can filter your different contacts however you’d like. For this example, we our simply using our “Lifecycle Stage” but can easily break that down by different sources, personas, sales reps, etc. Note: Use the value field to tie a monetary value to your metrics. For example, using “Deal Amount” to bring in the value of all of the contacts in a certain stage. From here, you can use formulas to calculate the weighted value of different pipeline stages. New Customers – Start by connecting the object where you are tracking new customers and their value; likely companies or deals. Just as you would for lead stages, you’ll want to anchor the object to the field that denotes a new customer; lifecycle stage, etc. Use the value field to bring in a simple count or the total dollar amount for won deals. Easily take a look at the row level data to see where customers are coming from, renewal dates, and more. Top of Funnel: Lead Source Breakdown Marketing attribution is tough. Staying on top of your lead sources and continuing to tweak and improve inefficiencies is a quick way to keep your growth metrics moving in the right direction. Keep tabs on where your leads are coming from by filtering different leads by their lead source.Use “Filters” when connecting HubSpot to Visible to break down new leads by different sources, campaigns, and events. Drill down using row level data to see what specific leads are coming from what sources. You can check out an Update example for sharing your funnel metrics and lead sources here.