The single biggest challenge when pitching to VCs: Convincing them that you can return their fund. VCs never talk about this at the meeting. But, it is THE ke

The single biggest challenge when pitching to VCs: Convincing them that you can return their fund. VCs never talk about this at the meeting. But, it is THE key factor that drives their decision. Took me a while to understand this when I was fundraising. These 6 simple steps helped me address the “fund returner” during the pitch: 1 - Always check the fund size of each VC before the meeting - an easy one today with all the ai search tools out there. 2 - Say it's $100m. This means that you need to show the VC how they will get $100m from your startup at exit (sale or IPO), i.e. that you will “return” their $100m fund. 3 - Assume the VC will own 10% of your startup at exit --> if they need to get $100m back, that means your exit valuation needs to be $1bn. 4 - Next, assume that the revenue multiples in your industry are 5x --> this means that you will have to generate $200m of annual revenues. 5 - Now, divide that by your current Average Revenue per User (ARPU). This will get you to the number of paid customers that you need to have at exit. 6 - Say, your ARPU is $10k. This means that you need to have 20k paying customers at exit with your current business model / pricing. Now you’re done with your prep. Your main job is to explain how you will acquire all those customers (or increase the ARPU). The more concisely this is baked into your story, the easier you make it for the VC to invest. Good luck! Zdenko https://www.linkedin.com/in/zzvada/ https://www.linkedin.com/in/zzvada/