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Founders should use predictive modeling to fundraise smarter – TechCrunch

Billy Libby CEO and co-founder of Upper 90A $ 1.5 billion hybrid fund that provides founder-friendly credit and equity to top e-commerce and fintech disruptors.

More capital is flooding The transition to growth equity in the early stages is progressing faster than ever. But despite the rampant enthusiasm for putting large-scale equity checks on startups, the founders are now in a unique place where they can think differently about how to capitalize the company. ..

Just as most services are highly personalized in private life thanks to the data generated by our activities, startups operating online run out of data from their operations. In short, data has become an asset for all businesses, diversifying the types of capital that were previously only available to late startups.

Data can separate the healthy and experimental parts of every business, making it easy to leverage revenue, marketing ROI, and inventory to predict future revenue streams and earn credits. Become.

So how do companies today need to leverage their own data analytics to raise money?

Early separation of low-risk and high-risk parts of the business

Founders need to think of their business as four different parts.

The risks are high but the rewards are high, and there is research and development suitable for equity to raise funds at the seed stage. Invest in adapting the product market in the hope that your business will reach an inflection point. You can make assumptions early on, but it’s not clear what R & D will bring.

Next are marketing and acquisitions. We need a more predictable ROI for the capital invested in these. That is, you can expect to measure every dollar spent and return a positive ROI (whether it’s brand awareness, lead generation, or improved conversion activity).

We have inventory to buy with the expectation that it will be sold at a certain value in the future. And there are devices that have an upfront cost to build a product, store, or service, with a strong sense of reward for that investment.

Understanding the value of each segment helps you understand which parts of your business are at high risk (such as R & D, when you don’t yet know the results) and which parts are more predictable (marketing, acquisitions, etc.). ..

Coordinate your financial plan rather than funding everything

Founders should use predictive modeling to fundraise smarter – TechCrunch Source link Founders should use predictive modeling to fundraise smarter – TechCrunch