Hot in Enterprise IT/VC - What's 🔥 in Enterprise IT/VC #344
This was a big earnings week for enterprise software companies from Crowdstrike to Sentinel One to MongoDB to Salesforce. As is the case for every enterprise software earnings call in 2023, there is no call without discussion of AI. Here’s Marc Benioff’s quote:
Here’s Dev from MongoDB:
Despite all of the excitement around AI there still is a Seed to Series A Fundraising log jam. As an enterprise founder going from seed to A, how do you stand out? First, there are fewer story rounds these days where investors will throw $15m for little more than an idea unless you’re an AI company started by a researcher from one of top labs. What that means is every other founder will have to focus on building a highly efficient lean and mean operation. As I’ve always said, going from an idea to product to first sales is your goal but how you get there also matters. It’s all about momentum and showing not only that you have Big Mo on your side starting with shipping product but also as you sign customer 1, what’s behind that. The best companies are able to tell investors that they need money because they are breaking and can’t keep up with all of the demand and product updates and need to hire some bodies to meet these needs. Investors are looking for these signals, and you need to make it easy for them to find it. Simple ways would be some early but solid customer count growth, usage, expansion and also a quality sales pipeline with early signs of repeatable success. I’d show these numbers in months and also aggregate into quarters since investors think in these time horizons. It also gives your company a longer time domain than days or weeks to show that beautiful 📈. The “holy shit, I’m breaking moment” shows your potential investors two things; your company is lean and mean, and if they invest they are investing into the beginnings of this 📈. There is no magic number to get a Series A done, but you will have a much easier time if you have Big Mo on your side. Many folks think of $1m ARR as a threshold, but we must remember that not all $1M ARR companies are built the same. It’s not the $1m ARR that matters but how you get there and how your company is positioned for repeatability. When your new investor puts 💰 into your business will it take another 18 months to get another $1m or 6? Is your $1m from a small number of customers sourced through friendlies or more diverse with smaller lands and more expands. IMO, while huge customers are nice, you’re better off having a number of smaller customers with smaller lands and some proof of expansion to truly show the market is there. There is so much more to cover on this topic but for now, just remember momentum matters. If you don’t have it, then find a way to manufacture it. An example could be that you tried a new sales motion or marketing plan or delivered an important feature and since that time look at the velocity. Even if things aren’t going great, you can still try new things to find a way to show and tell that story of 📈. As always, 🙏🏼 for reading and please share with your friends and colleagues. Scaling Startups
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