Commercial Due Diligence

  • your TAM (total addressable market) and assumptions behind the TAM. This is about how big you can be and how fast you can get there. Investors love to dream, and they don’t want to waste time (and money) on the small fry — they’re all looking for a 10X return, or even the occasional unicorn, to compensate for all the failed investments. So, yes, they want you to have a big TAM, but a real one, not some fancy number. Same for your potential market share. Oh, and they want the detailed assumptions behind those forecasts: how many customers acquired, retained, how much average revenue per customer, how often, etc… Most investors have mandates, or at least preferences, so they’d already have a benchmark in mind to judge how realistic your TAM is, so don’t fudge it or they won’t read any further.
  • your existing revenue stream: here lies the part of the DD that requires more work. Your investors are going to want to check your bank account to make sure you are being paid in real $, review your contracts with each and every customer, they are going to want to talk to them about their experience, and from there they are going to make up their mind on whether you have product-market fit and whether your revenue forecasts are hyped up or realistic.
  • your path to profitability: potential investors will also want to dig in your sales and marketing spend, to validate your cost of acquisition, customer lifetime value, and other key metrics that support ROI and profitable growth.

--

--

--

Helping startups and scale-ups hack growth. I love tech! Reach me on www.10xMKTG.com

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Meet a Founder: Vidya Munde-Mueller

Rach Marie Sproha of Go Getter Girl: 5 Things I Wish Someone Told Me Before I Became A Founder

WOMEN STARTUP COMPETITION WINNERS ARE BREAKING THE TABOOS

Start-up Stories with Cynthia — Episode 4

How Do I Know If My Idea Is Worth Investing In

What are the first steps to starting a side business that makes you money?

creativeSHIFT: Connecting European creative industries

Launching Angular Ventures I

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Max Bonpain

Max Bonpain

Helping startups and scale-ups hack growth. I love tech! Reach me on www.10xMKTG.com

More from Medium

Elevating your brand strategy: Navigating the crowded Ecommerce landscape

How to expand internationally: GTM Strategy for SaaS sales leaders (ft. Sidharth Sharma)

Founder Motivations: The Light and the Shadow

Customer Spotlight: Notify