FiBAN 24/08/2023
In this FiBAN Monthly, we continue to discover the learnings from the articles “5 tips for getting an angel investor onboard” and “Demystifying Deal Flow: Is your team coachable and ready to take feedback?”, where we shared the lessons from the last batch of startups that applied for seed and pre-seed funding through the Finnish Business Angels Network.
Having screened hundreds of companies in my career this has been the biggest and most frustrating issue.
One of the largest problems in startup pitch decks sent out to investors is the go-to-market (GTM) strategy. From FiBAN data taken out of HöpöHöpö screening tool, as many as 79% of startups lacked in their go-to-market strategy. I’m convinced that startups think about the go-to-market, but they would need to communicate it more clearly.
As this is the biggest issue of pitch decks, note that there is a high positive correlation between your ability to communicate your GTM and making it past the screening board. Next, I’ll give you a few examples of what goes wrong and how to fix it.
GTM is either too vague or too ambitious
Seasoned angel investors like Teemu Varpanen agree on the importance of go-to-market when evaluating a company.
“To be frank, the challenge to articulate go-to-market is the biggest reason why startups are not seen as fundable”
Teemu Varpanen, Angel Investor at FiBAN
For example, Startup A tells in their go-to-market slide that they’re going to take over the whole world’s market worth 100 billion during their first 6 months. But what happens before that? What are the small steps you take before you reach that? During the first month? Or during the first 2?
It is important to highlight the potential of the market for the investors, a good start would be focusing on the SOM (Serviceable Obtainable Market). This is the most descriptive and important out of the concepts commonly used in go-to-market: TAM, SAM, and SOM. With this model, it is important to state your assumptions and what they are based on.
From my Deal Flow Manager’s experience, these are the usual problems with GTM in startups’ investor decks:
- Not talking about the customer, segmentation, and positioning.
- GTM is too vague.
- Talking only about the total addressable market (TAM).
- Your key customer is not clear – Who is the decision maker when it comes to buying your product?
It also helps to add your milestones and a timeline for conquering your chosen markets.
An example of another extreme with go-to-market is vagueness. For example, Startup Y says they’re going to sell to the government and going to do marketing. But with what budget? To which segment? To who exactly in the government? How is your product relevant to that segment?
Go-to-market can be expressed in detail. If you feel you’re running out of space, you can always provide additional information later in the deck by using asterisks*.
Here’s how to fix your startup’s go-to-market strategy
With go-to-market, it is important to first focus on the customer, segmentation, and product positioning. Here’s some helpful information to walk you through it.
Define your Strategy.
- What type of strategy are you pursuing: product-led, or sales-led, or perhaps both? In what balance?
- Is your GTM tied to your startup/product strategy?
- How do you plan to enter those markets and why?
- How does your company position in the market? Who are your competitors?
- What is the angle to differentiate from the competition?
- Are there relevant partnerships that help you reach your target customers?
Define your Ideal Customer.
- Who is your target customer? Explain who is the end-user and why they would be buying your product or solution over the competitor.
- Are they enterprises, SMEs, early-stage companies, or governments?
- Or in B2C, what is your ideal customer persona?
- Why you are targeting this customer type?
- In which markets? Which countries and segments?
- Is there an industry focus?
- How and where will your product be sold? Include distribution channels.
- And to whom? Who is the decision maker from the customer’s side?
Articulate your Metrics.
- Include CLTV – CAC and other relevant metrics.
- Articulate milestones and timelines. Which activities happen and when?
- Explain your potential risks.
This is not an all-extensive list that every early-stage startup needs to have but more of a rough guideline to activate thinking on this important topic.
There are many tools waiting for utilization that will help you get started including FiBAN’s free resources for startups such as our startup pitch deck template for seed rounds, checklist on how angel investors evaluate startups, and guide to raising angel funding, not to mention ChatGPT and other available large language models.
With these learnings shared, this is my last article as the Deal Flow Manager of FiBAN and I will be handing out this unique and inspiring role to Miikka Miettinen.
Article by Topi Laakso at FiBAN, FiBAN’s Deal Flow Manager (until August 25th)
More information on FiBAN’s deal-flow
Miikka Miettinen
Deal Flow Manager
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