NUS - TR3201

Entrepreneurship Practicum
Jul 2023 Batch
Former COO |3 Exits| INTJ| Integrator| Operator| Growth, Product, Operations

COO GM - SH
Snr Growth Product Lead (VP) COO
PARKLU/ Curiosity China/
manager WeBox iProspect/ Darwin
LaunchMetrics (MD) FarFetch
Orbit Startups
SOSV 2017 Merger 2016
Acquisition 2020 Acquisition 2018
Orbit Startups
SCALING BREAKTHROUGH STARTUPS
FROM AROUND THE WORLD
ACROSS EMERGING AND FRONTIER MARKETS

• hands-on support for partnerships, business development,

fundraising and growth

• initial investment package of US$150,000 with millions available in

follow-on funding.

• > 100k USD Rev annual

Not all businesses are start-ups
Why? First, the Dynamic
LPs (limited
partners)

VCs
Startups
Lets start with the LP
• Risk
• Duration
• Liquidity
• Return

Not just about absolute

return

Also, cash cycling

Venture sits here

 VC deploy the capital, knowing the risk
Investment amount
Start-up unknowns
Vs
• Founder ability
• Competitors Equity Ownership
• Customer appeal
• Gov legislation
• Unit economics Risk - dilution
• Scaling issues
• Lots and lots of
other stuff Note protections –
Power Law • Debt-convertible
• Common/Preferred Stock
Investment approaches
More on the VC Method

https://www.vefund.io/en/quantitative-valuation-
methods-for-startups-a-guide-for-vefunds-
valuation-calculator/

https://vcmethod.com/
 TL;DR
• LPs need to make greater returns to their own investors, they choose asset
classes (and funds to invest in)
• VC Funds allocate their capital and need to make greater returns for LPs
• VCs have to weight their investment against –
• Probability of failure (power law)
• Dilution over future rounds
• Time horizon

• Picking start-ups is an art and a science.

• SHOW ME THE MONEY!!!!!
Quick Exercise
• You have 100mil
• You need to double in 10 years (200mil)
• 100k/ company – how many companies?
• 5% per company – value of each company?

• In 10 years, all but 1 company dies.

• How big does this company need to be (as a multiple of growth), for
your 5% to be worth 200mil?
What is a start-up?

• Scale (TAM)
• Speed (time to scale)
• Venture Capital backed

All start-ups are businesses.

Not all businesses are start-ups.
 Peter Thiel – 7 Questions
The
The Engineering The Timing The Monopoly The People The Durability The Secret
Distribution
Question Question Question Question Question Question
Question

Can you create Is now the right Are you starting Do you have the Do you have a Will your Have you
breakthrough time to start with a big share right team? way to not just market position identified a
technology your particular of a small create but be defensible unique
instead of business? market? deliver your 10 and 20 years opportunity
incremental product? into the future? that others
improvements? don’t see?

• https://medium.com/@omarismail_io/peter-thiel-on-the-seven-questions-a-startup-must-answer-e638b7767d9c
• https://www.amazon.com/Zero-One-Notes-Startups-Future/dp/0804139296
What allows a start-up to Rocketship?
Margin
Network
[X] aaS Providers/
Platforms
Brokers

Hubspot • Scalability drives efficiency

Ebay Law Firm • Retention/ repeat business is a default
(B2B)
• Switching costs are high
• Alternatives are sub-par
MS Office • Barrier to competitors is high
Uber Distributer
(B2B)

Spotify TL;DR – the math of the business model

AirBnb Agency favours scale and growth
(B2C)

Alibaba Netflix
Affiliate
(B2B) (B2C)
 A look at Rocketship maths
250,000
Start-up
250,000
Margin Business
• CAC
• COGS
200,000 200,000 • G&A

150,000 150,000

100,000 100,000

50,000 50,000

- -
Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10

Rev enue CAC COGS G&A Rev enue CAC COGS G&A
 More Math
CAC and LTV CAC and Churn
• CAC = 100USD • CAC = 100USD
• Annual Subscription (ARR) = 50 • Annual Subscription (ARR) = 50
USD USD
• Customer subscribes for 3 years • Customer subscribes for <1
• LTV = 150USD years
• CAC Payback = 2 years • LTV = 50USD
• CAC/LTV = 2/3 = 0.6
 Unit economics
What if you have a margin Start-ups can only work with high
business with high churn?! margin, low churn and fast return
of CAC

• CAC = 100 • CAC = 10

• LTV = 50 • LTV = 150
How long
• COGs = 40 before profit • COGs = 60 One CAC of 10 = 120
can be used for future CAC spends!

• G&A = 5 CAC? • G&A = 15

• Profit = 5 • Profit = 75
(LTV= 3 years, so COGS and G&A are the same)
 Burn, Runway and Cashflow
• Typically, need time to get to the right scale for unit economics to work
• Investment tends to be front loaded

Runway, burn down

400,000.00

300,000.00
Runway ends Breakeven point
200,000.00

100,000.00

-
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

(100,000.00)

(200,000.00)
• Burn
(300,000.00) • Runway
• Breakeven point Rev enue Total cost Cash Runway
 OK, last bit of math (for now)
• LPs want a return
• VCs invest, and you need to be 1/10 to win
• When you win, you need to win BIG
• You need to be profitable, and have high retention, so you can put more $$ into CAC to
scale
• You need to outlast your runway

• CAGR
• CMGR
• Rule of 40
 Stages of a start-up
Start-up Stage MVP PMF T2D3 Scale

Funding Round Pre-seed Seed Series A Series B+

Stage risk Technical Risk Market Risk GTM Risk TAM Expansion Risk

Product Is the problem

Will others pay to
What problem am I big enough for Where can I find more ppl
have this problem
Business Ops solving me to in need
solved
Rocketship
Business Value
m-on-m growth
10 paying 100 paying Rule of 40
“Goal” >20%
MVP
 Finding a problem

Customer Lean
SCAMPER
Interviews Canvas
 SCAMPER

https://www.interaction-
design.org/literature/article/learn-
how-to-use-the-best-ideation-
methods-scamper
Building the MVP
• How do you prove a solution to the problem with no $?
• Investment needs to be proportional to confidence/feedback
• https://www.antler.co/academy/minimum-viable-product-examples

1. Solution with NO code

2. Solution with free tools (google docs!)
3. Solution with low code/ simple code (wordpress/ lowcode tools)
4. Beta solution (this is when you hire engineers!)
 Lean Canvas

https://blog.leanstack.com/what-is-
the-right-fill-order-for-a-lean-canvas/
What is Product Market Fit
• Demand> Supply
• Revenue generating usage
• Recurrence

Example - restaurants
• How do you know a good one?
• Full
• Profitable
 Factors affecting product market fit

Product
Ease of use Awareness Cost/ value
need

Usage Demand Competing Operational

frequency market size alternatives efficiency

Note how these mirror the typical departments in a business

Typical finance models and reports
Structure outline – aim to show inter-
relationships
Assumptions Dashboards
Input sheets
Model (outputs)

HR Investors

OPEX Due Diligence

Weekly/monthly
CAPEX
tracking

Sales
 One spreadsheet to rule them all – Fin
Op Model
Marketing (leads) 100
Marketing Marketing (leads) 100
(leads) 100 Sales (1st Interview) 90
Sales (1st - Sales (1st Interview) - no response after 3
Sales 5 Interview) 90 calls 20
Sales (Quotation) 10 - Sales (1st Interview) - fake number 15
Sales Revenue 6000 - Sales (1st Interview) - not interested 45
Sales 5
Sales (Quotation) 10
Sales Revenue 6000
Sales 5
OPEX 4000
Sales Revenue 6000
OPEX 4000
OPEX 4000
Profit 2000
Profit 2000
Profit 2000
Can you tell if $$ was spent well?
 Why Churn matters
• Revenue = 100/mth/ customer • If just 1 customer drops -
• OPEX = 900/mth • - 100 in rev
• CAC = 50/ customer • - 50 in wasted cac
• - 50 in cac to acquire a substitute
• Lost time and effort
• 9 customers/mth – break even • Reduction in growth rate
• 10 to make 50 profit
• Spending 200 just to stay in place
 First 100 Customers

• “Do the things that don’t

scale”
• “Nail it, then scale it”
• “Grease the groove”
• Manual > Process >
Systemization > Automation
• Investment<Return
Growth (GTM Fit) - when are you ready?
• Reliable customer demand -
• Predictable interest from marketing efforts
• Predictable registrations
• Predictable purchases
• Revenue growth –
• Linear revenue growth
• Low churn
• Renewal, upsell growth
• +ve unit economics
• Scalable Infrastructure
• Consistent operations
• Tech that meets internal and external needs
What is it all about
• Rapid and aggressive growth
• Capturing market share
• Improving unit economic efficiencies
• Driving down unit CAC
• Prolonging LTV
• Driving up ARPU (cross/upsell/renewal)

• Valuation based on revenue multiple

• More predictable, higher future income = higher multiples
Growth approaches
A/B testing

• Headlines
• Timing
• Message
• Incentives/ offers
• Packages/ pricing
• Target groups
• Platforms/ channels
Thinking of the exit

Die Sell Float