Planning Your Startup's Roadmap

‍“It’s not about where you’ve been – it’s about where you’re going.”

It’s critical to get your Roadmap right if you want to successfully raise. So pay close attention! Get a coffee, blast music, do some jumping jacks – do whatever you do to make sure you’re fully awake and concentrating.

Mindset:
When looking at your Roadmap, investors want to see what they’re investing their money in and how that is going to have an outsize effect on the valuation of your business, and bring you that quantum leap of increased value:

A Value Inflection Point.

Value Inflection Points are subjective as to when they occur, but the question investors are generally looking to answer is:

“Show me how this investment will make an outsize impact. And then, show me the story you’ll be approaching your next round with.”

Value Inflection Points fall into three buckets: “Show Me the Money,” “The Return on Investment (ROI) Play,” and “The Moonshot.”

• 💸 Show Me the Money is the strategy that gets revenue as fast as possible – it has the highest likelihood of success and shortest timeline, even if it’s not the biggest opportunity of them all.
• % The ROI Play takes longer. It’s a medium-term opportunity, about 12-18 months, and requires more money invested to reach the goal, but it’ll be a wonderful payoff, and it’s very high likelihood of success will result in a stable and high-growth business.
• 🚀 The Moonshot is the Big Kahuna. This is the major play that goes something like this: “If we get it right and the stars align, then we will hit unicorn status.” The Moonshot takes longer – potentially 2-3 years – and likely requires more time than a greater investment, but if it can be pulled it off, it’s the superstar win.

You might notice that you’re more attracted to one or another of these project profiles. That’s not by accident. Investors are too.

Some investors want to see that your priorities are the same as theirs and that you’re most focused on showing that you know how to make money in the near term (💸💸💸).

Others like to see that you have a solid plan and are focused on the readily-achievable medium-term Value Inflection Point (%%%).

Still others are looking for that enormous next Airbnb-level exit (🚀🚀🚀🚀🚀🚀🚀🚀) and the associated vision.

But by laying out a plan with quick wins, big medium-term wins and a large long-term payoff, there’s “something for everybody.” With the right strategy, you’ll be able to take the conversation into the area they’re most interested in and avoid getting dinged for “lacking in long-term growth potential,” or getting put in the “too long to achieve meaningful results” bucket.

Insights:
When creating a Roadmap for a pitch, we suggest being descriptive but as short as possible. Investors want to know where their money is going, and the more specific you can be, the better. Transparency shows you know what you’re doing and where you’re heading, and that shows confidence. And an investor can feel confident in you, too.

When you’re thinking about creating a Use of Funds for investors to review – you know, a pretty pie chart that they can look at and go “Oh, 70% is going to R&D” – we suggest you don’t use the typical accounting buckets.

Vagaries lead to unnecessary questions. For example, what do the headings “Personnel” and “Infrastructure” on a Uses of Funds chart really tell you? If you don’t know, neither will an investor!

But if you changed those same headings to “Expanded Sales Team to Grow Customers by 10x” and “Factory to Reduce Lead Times by 50% and Grow Revenue by 5x” then that’s a totally different approach, and one that will stand out.

In the same vein, if you said an investor, “It’ll take $1M to expand the sales team, and within 9 months maximum they’ll be using our proven system we’re already using to produce 10x the revenue, which means that our valuation should increase by roughly $8M,” then that is an extremely clear statement.

An investor could take that to mean: “If I invest $1M today, in 9 months my share will significantly increase in value.” The message was received, and the following can be clearly pinpointed:

• 🏗 What the money is for,
• 📈 What it’s going to affect in KPIs (and therefore, how that will increase the value of the company),
• ⏱ How long it’s going to take, and
• 💸 How much it’s going to be.

With every initiative/investment area that you present, if you have clearly addressed these points, you are in a good position.

Prompts:

• What are your Top 3 investment initiatives (Show Me the Money, the ROI Play, the Moonshot)?
• How are your Core KPIs and/or Traction Metrics going to change as a result of investing in those areas?
• How long will each one take?
• How much needs to be invested in each to make it happen?
• What will you need for Working Capital and Overheads and Contingency?
• Why do you need an investor to accomplish these? Will you get it done faster? Is there a unique opportunity here?

Resources:

• Tom Mohr on Value Inflection Points across the business lifecycle
• Ben Yoskovitz on Designing your Use of Funds toward the next big milestone (Value Inflection Point)
• Akriti Dokania of Octopus Ventures on The Three Big Things, and the Three Red Flags

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