Growth January 24, 2020

I hit $25k MRR and now I am stuck, customers only need my product 4-6 months max... what should I do?

Ryan @RyanHickman

We launched 7 months ago and have been growing the company.

We are a CRM for raising capital, complete with document tracking (for pitch decks) and a pre-populated database of over 100k investors.

We crossed the $5k mark and felt what we were doing was pretty viable. In month 3, around $10k MRR we started to see early signs of a shorter customer lifespan. Either they raise capital using our platform and no longer need the tool or they cancelled because the tool didn't help them in the way they expect.

That said our annual LTV($) is $2k-$5k during that 4-6 month window, which in a macro perspective isn't a bad situation.

Customer success is also variable, where some users get funding, meetings and success -- others are too early stage, pre-product, etc and don't get interest.

We tried to create additional features to handle post raise (cap-table management, investor relations updates)... however they aren't as sticky as we originally thought they would be.

Looking for ways to combat this...all ideas welcome.

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    1. Can you just aquire users and make money as is?
    2. Is there more money on the table for the current process? Would VCs sponsor this? Or sites that report on startup funding? Or attaching it to startup jobs?... Crowd funding?...
    3. Would selling the business be an alternative for this crowd?..
    4. Cross selling unrelated offers for the same crowd?
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      @hatkyinc... $25k MMR is simply not high enough.

      We've had mixed reviews from VC, additionally, I think we would rather simply make a profitable, sustainable company than go the direction of VC. We also thought about crowdfunding, however, after doing a survey of past customers we quickly learned it has a bit of a bad stigma for our brand.

      I really like the idea you mentioned of attaching it to jobs, that is brilliant!!

      Selling is also an option and something we're going to consider!

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        Maybe I didn't get the original premise
        Your customers are startup C levels.
        That create a pitch deck to investors.

        But the investors are rarely VCs?

        Whoever the common investors are, wouldn't they be willing to buy some advantage access to you customers?
        That's what I mean they would sponsor... There are different ways this could be had...

        So like your customers pitching for investment see non traditional ways of getting money as demining? ..
        Crowdfunding comes in many forms.. there is smaller more private investors that join on platforms due to size, but are still 100% equity, not gift based...

        With the 25k MMR I assume you don't have 100% of the market and an option that's different is change focus from building stuff to pure marketing to see how big it can be even if it's a one-off..
        Do you have every single startup school talking about you? Every startup forum or column etc..
        Is there a number that would just be good for this project?

        Jobs are like the common next step after getting the money AFAIK, I wonder if there are other common ones... Like somewhere in the process one needs a lawyer, after depending on size, possibly office/workspace rental - need to put the new people somewhere and there is money for an upgrade, maybe furniture then... (Or just a pack of it all)
        Marketing on getting that funding is where I mentioned the reporting sites..

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    Hey Ryan I'm sure this is something that happens to similar companies doing what you do. Last night I just found out about Sidebean on YouTube. https://slidebean.com/caya they seem to be doing well. Although they are mainly concerned with the physical pitch deck. I see a lot of people below have written comments and I haven't been through them all. But from a marketing / targeting perspective instead of trying to get a recurring monthly revenue from the same person, build your model around the fact they will utilise the service until they get funded. The good thing is there are heaps of new startups going through the process every single day. So just focus on that market.

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    I used to work in commercial real estate finance. We represented real estate developers, investors etc who were looking to get financing for their projects. This could be a combination of debt financing (mortages), and/or equity financing.

    Our clients were always going through a process of seeking financing, going from one project to the next. Maybe, you could take your existing tool and apply it to a different audience (like the one I mention above). It might require some tweaks, but a new audience might have a more ongoing requirement for a tool like the one you have built.

    Another audience to consider would be small cap public companies. Search through LinkedIn for people who work in Investor Relations, and see if you can filter by smaller organization size. Perhaps you can tweak your tool to appeal to them. If they have someone whose full-time job is investor relations then they might be interested.

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      A new market may make it more viable for sure. I like the idea of being able to stay with a customer group who is always in market. Adds longer aLTV (months) to our base.

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    Have you tried "land-and-expand", and talking with customers who have been onboarded about what their future needs are? If I were in your shoes, I'd very much want to get some perspective into my customer's needs at multiple points during the existing proven customer lifecycle, and help them address it. That way, they don't have to give up a trusted relationship and learn a new set of tools.

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      So this is interesting. The feedback we get vs the actions taken. IR is important to them before raising the capital, however, the IR tool goes 100% unutilized. We do cross-sell pitch decks & financial models ... again, I'd say that's due to the fact it empowers their raise.

      Perhaps its price point. We do charge $299, $699, $1299 & $4999 for our various programs. Our retention is lowest on $299 (as its low touch). $1299 is our second highest retention (~6 months). There are unique economics at play.

      Perhaps we create a more affordable "base" plan that users can scale up and down into.

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        I feel like if you already have great sales at those price points, you should retain that pricing power and flexibility rather than going on a pricing race to the bottom. That just sounds like pain and suffering.

        Maybe you could look for customers and angels who might want to do a "modest" upgrade from a "lifestyle business" and could use some extra oomph? Say businesses that are currently making 10^6 ARR and want to do 10^{7, 8} and would be willing to trade equity instead of selling debt? The only two investors I know of in that space are TinySeed (might be targeting smaller customers) and Earnest Capital. If you can talk to moderately small companies and tell them they could become the next Gumroad or Basecamp and pitch investors to buy in to, you could create a blue ocean market with yourself as the middleman!

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    I take it your problem is not with the investors, having 100k in your database. On the startup side, have you looked into word-of-mouth-based marketing/partnership efforts?

    Many startups huddle up in co-working spaces or accelerators. Giving them the option to save some money by referring their cohabitant startups to the product might introduce a good amount of fresh and interestingly different startups to the platform. Most companies that are working from temporary offices should be looking for money, so this looks to be a good audience.

    A referral system can be a win-win-win: the one referring gets a temporary discount, the one referred gets a temporary discount and comes pre-vetted, you have two more customers, and your investors have two more investment opportunities.

    Talking about accelerators and incubators: how about partnering with those to get access to a whole batch of connected startups? There are also a lot of public incubators/accelerator programs that would love to have better access to investors - and they have government funding that they can allocate to tools like this.

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      Going into accelerators and incubators feels like the right move. We have a referral program / partner program we use for company -> company networking. I like your idea however to do accelerator -> company networking.

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        I usually suggest this to my consulting clients who can benefit from selling to "team leaders" who then onboard their "team" that my clients can then monetize per-seat.

        "Sell to the one with the budget," I guess.

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    The industry you are focusing on has this natural rhythm you starting to realize. Companies' founding process is about 4-6 months; then they burn money for about 12 months. After that, they are looking for the next round again. So if you can allow them to "hold" their account but still keep them as a client (remind them with some bits of info during the holding period that you exist), some of them will be happy to come back. So you have to have a bit longer perspective with customers. I would focus on investor relationship management post-funding similar to what https://investory.io/ do.

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      The post-funding experiencing is one that has tremendous value, it's one wee must crack.

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    What about managing relations with investors post raise. After raising, now you've got board meetings to prepare for and investor communication to be had. Investors want some way to see information into the company, so providing a way to manage the continual relationships with investors could be something you could do.

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      So the irony of that feature is we added it, unfortunately NO ONE uses it.

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    Is it possible to price “per round?” Seed stage companies pay a flat fee for their access until they raise. If they had a great experience, they’ll come back when it’s time for Series A, etc. I have no idea if it’s a viable path, but it would align your business model with the natural customer life cycle.

    Or it’s a dumb idea and I need more coffee this morning :D

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      It's a good idea, its a challenge to figure out how to keep them during that down cycle.

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    Hi, I am busy right now, but drop me an email to bochbart [at] gmail.com - I will look at it next week.
    This is my area of expertise so I will figure something out.
    Of course for free.