Q1: A VC requested a one-year or 6-month sales pipeline. What exactly are they looking for?
VCs typically aren’t looking for exact accuracy in projections. Instead, they want to understand how you think, including the assumptions you’re making about growth, sales, and market conditions. They're assessing whether these assumptions are well-founded and if you've accounted for relevant market or product risks over the next year.
Q2: Does this mean they want a detailed list of potential customers?
No, a detailed customer list isn't usually required. VCs are more interested in understanding your approach to acquiring customers, the scalability and repeatability of your sales funnel, and any unique aspects of your go-to-market strategy.
Q3: Would a 2-year financial projection with customer acquisition metrics work?
Yes, a 2-year projection can work as long as it includes clear metrics on customer acquisition. VCs will look for the underlying assumptions in these projections to gauge the feasibility of your growth targets.
Q4: Should I present a top-down or bottom-up approach?
Either approach can work. What’s most important is that you lay out your assumptions clearly and show a logical pathway to your goals. For instance, a top-down approach might focus on market share, while a bottom-up approach could break down growth by customer persona. The key is clarity and showing a realistic path to achieving your sales objectives.
Q5: What specific aspects should I highlight?
Highlight your top-of-funnel sources, customer personas, and acquisition strategy. Ensure you address both scalability and any unique value propositions that differentiate your pipeline from competitors.
Q6: Any other tips?
Remember that VCs are not only interested in projections but also in how you approach and plan for growth. So, be prepared to explain the logic behind each of your assumptions and to discuss any potential risks.
Credit: David Zhou