Trying to Raise a Round? Business Intelligence for Investment Management

Congratulations! You’ve launched your minimum viable product (MVP), are steadily gaining traction, and now it is time for the next step: investment. While raising funds is vastly different in Europe, where our company, datapine, is based, compared to the US (seriously, read this spot on comparison) one thing investors worldwide can agree on is that investment likelihood comes down to your team, your product, and your numbers. Christoph Gerlinger of German Startups Group elaborates: "Usually you know early on if a team has what it takes and if the business model has a future, but to make any critical investment decision - it comes down to the numbers. Financial, user acquisition, sales, and marketing KPIs have to be meticulously tracked and presented in a way that proves growth and makes sense." Having judged pitch competitions all over the world, I can say with assurance that, even if startups have their numbers together, the winners were those teams that presented their critical metrics in an easy-to-understand, sensible format. Here's what you need to know when it comes to business intelligence for investment management.

What Are the Most Critical KPIs?

What should you show potential investors? This, to some extent, depends upon your industry. The KPIs you must track for a SaaS startup look different than metrics your friend down the hall is tracking for her mobile app. The KPIs to follow and include in your pitch deck are those that matter for your industry. They must show that consumers are using your product, loving your product, and possibly paying for your product (or at least have the potential to do so). Every investor I spoke with agreed that founders should stop using vanity metrics, and that showing traction is the best way to seek investment.

Proving Traction: Is Your Product Sticky?

“Traction is key. What early traction has the company received (sales, traffic to the company’s website, app downloads, etc.). How can the early traction be accelerated? What has been the principal reasons for the early traction? We need to make sure they have control over their numbers and that they can deliver quality reports in an understandable format,” explains Kai Hansen, Founder of Rheingau Founders. The key metric is Customer Acquisition Cost (CAC). Investors will compare the number to your projected Customer Lifetime Value (CLV) to determine whether their Return on Investment (ROI) will be positive.

Reduce Churn

As you traction grows, the number of customers who drop off and no longer use or pay for your service will grow as well. Monitoring churn to figure out how to prevent that drop off is key for growth and investment. Luckily, Business Intelligence software can help you glean and analyze insights. For example, before 2007, O2 Ireland, part of Telefonica Europe, had a ton of disparate customer data and very little insight about how it could be used to improve customer retention. After investing in business intelligence tools, O2 Ireland learned a key fact: only 65% of their pre-paid SIM customers have an ongoing relationship with their company. This insight enabled them to target customers more precisely, and invest their efforts where they would be most effective. Business intelligence is now part of the company culture, impacting everything from location-based marketing to everyday decision making.

Demonstrate That You Know Your Business

While these numbers are ultimately used to predict whether success is viable, they also prove to investors that you know your business. Investors need to believe that you understand your industry, and your user behavior, so that you will spend their investment wisely. If CAC is higher than CLV the investment is a no-go.

Using BI Tools for Competitive Advantage

Nowadays, the value of your data is key (especially in Europe) to securing investment. In a world where 80% of data in unstructured, quality business intelligence, which can detect patterns even in Big Data, confers a competitive advantage. Investors pay attention to these details. Making efficient use of every type of data available will raise your profile and make your company a more attractive target for investment.

State-of-the-Art Business Intelligence Tools

Even if a VC or angel invests in your company, you must prove that you have control of your numbers and that you can deliver reports on time, in a quality, understandable format. Fortunately, business intelligence tools have gotten easier to use and the cost, once prohibitive for startups, has dropped dramatically. With the introduction of SaaS tools, every company can harness the power of business intelligence software to prove growth to investors in a logical format. datapine's business intelligence turns raw data into easy-to-read, interactive dashboards and instant charts so that even technically inexperienced users can intuitively create complex queries and generate the insights investors needs to see. We also offer a 14 day free trial so you can try it out for yourselves. Your idea and your team are your roots, but most companies require investment to grow. Demonstrating mastery of your numbers, including knowing which are important, how to use them, and where they are headed, will give investors confidence that your company will be a deserving home for their funds.