HUM120-L9

Review

Valued Round (Seed, Series A, B...)

• Valuation

  • pre-money valuation: 3M
  • post-money valuation: 4M, if you invest 1M
  • investor gets 25% equity in the company

• Liquidation Preference

  • who gets the money out first?
  • how do I cash out?
  • No preferences (Entrepreneur got lucky)
  • Non-participating preference (NPP) (standard)
  • participating preference (PP) (double dipping)
    • 1x, 2x, 3x...
    • not fun

• Example

  pre = 3M; inv = 1M, post = 4M (inv. owns 25%)

• Financial Docs

  • term sheet
  • stock purchase agreement
  • investor rights agreement

SAFE (Pre-seed, Seed)

Simple Agreement for Future Equity vs. Convertible Note

• no interest (2% ~ 5%)
• no muturuty date (2Y)
• usually no discount on next round
• will have valuation cap

• convertible debt round
• discount or cap: both or neither
• Investor Psychology in 60 seconds //Lec8

Persuading Customers I

Target market, target user

• TAM
• who are the most likely buyers
• user-centric design + validated learning
  • feasible
• are you solving the problem?
• most startups failed since their product are feasible and visible but not desirable
• using future users to get to MVP

persuading users to help you

1. where will you find your future customers?

   • home/work: friends and family, colleges
   • online: social media, blogs, groups
   • offline:
     • B2C: cafes, malls, campuses, customer events
     • B2B
   • finding your future customers
     • already a customer of a company

2. how will you persuade "them" to help you?

   • "them" = (your users) or (your users' keepers)
     • solving their problem: help me help you
     • vision/purpose
     • reward
       • payout: coupons, cash, gift, gift cards
       • discount or considerations as (future) customers
     • recognition: founders/patroon circle

3. what do you want to learn?

   • validate the problem/need

4. how will you learn from them?

   • validated learning: carry out experiments

   • "build" - measure learns, what will you share with them?

     • concept
     • product description

   • measure: fet data

     • explicit: via polls, surveys (online/offline)
     • implicit: user tracking
     • example:
       • the coming soon website to see if the user clicks it

   • A tale of two startups: IMVU

     • roo
       • if you have your products ready, I will be your first customer, note that down

Impact

Initial customer traction and its impact

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