Two early-stage founders, both with promising products and large market opportunities, pitched their respective businesses to a prominent venture capital firm. One founder relayed a captivating narrative explaining her product’s unique design and predicted the product would gain significant share by satisfying a huge pain point.
The other founder used numbers to describe her business. The market opportunity was $10 billion, the company had a 2% market share and with the proposed marketing strategy, was predicted to capture another 5% in 3 years with an average CAC of $10 and ROI of 5x. The founder went on to quantitatively detail the business’ key growth drivers and how the proposed $2 million investment was expected to generate $10 million of free cash flow.
Who do you think received the VC’s investment?
If you’re fundraising to grow your business, limiting your pitch to a captivating story about your business vision or gut-based predictions about your business’ trajectory will only get you so far. To attract capital and speed up growth, it is essential for founders to quantitatively support the investment merits of their businesses. In the words of celebrated entrepreneur and host of “The Profit” Marcus Lemonis, “If you don’t know your numbers, you don’t know your business.”
Muse Advisors was formed with this mission in mind — to empower women business owners to accelerate their business growth. The key is to have a business strategy built around solid financial data. Historical financial performance, defensible assumptions and reasonable projections can help a lot in making your business case. Without this base, potential investors often struggle to find a rational means to defend their investments, and many may pass you by.
When you know the numbers underlying your business, your credibility and confidence as an investable business leader gets a boost. You will make better, more informed decisions, which can lead to greater fundraising success, strategic opportunities, profitability, and importantly, a healthy return on investment.
Our process is straightforward. We spend time talking to you to understand your business. We break it down into quantifiable drivers to create a financial model – a business’ story translated into numbers. You, as the founder, are an essential part of this process – you will be able to discover how data plays a critical role in your business decisions and success. In time you will be able to answer important questions such as: What are my key growth drivers? When will I be profitable? When can I pay myself? How much money should I raise? Your data-driven responses will not only impress potential investors, they will provide you with a deeper understanding of your company, and a clearer, more robust roadmap to growth.