Planning for the next round…

The CEO of a B2B IoT company reached out to me yesterday asking what I’d want to see from the company in order to want to re-engage around their Series A. They are just wrapping up the seed round now. This is a great mental and planning exercise for any company to do right at the end of a financing so they are thinking about the next phase of the business in terms of milestones, not just cash-management or revenue alone. I thought I’d share my responses here.

This is an imperfect, hastily written list that has gaps. I’d also view it as a set of things to start to gain clarity on, develop against and measure during seed stage. It’s not “solve everything in one round”….

Vertical / G2M — A repeatable and familiar customer profile and sales approach where you identify, target, pitch, pilot?, close and even expand (negative churn) with a bunch of accounts (hard to pin a number, depends on cycle and ASP).

Pull, not Push — Early signs that the market was choosing you and that you could nurture engagement w/o having to do unnatural things to close every customer.

Unit Economics — Super important for an IoT company. Where are the COGS/LTV today and where is it reasonably going to get to? Hardware+Software+Enterprise customer acquisition can get expensive fast. What do the margins look like in this phase and where will they be in the next one? Are your pilots or beta customers churning out?

Ecosystem — Can you attract and engage partners, even if they were pilots or early relationships, who could help take your product into their customer base and help service the clients so you didn’t have to compete with existing relationships or companies that would block you from winning larger deals. You are not the only vendor offering solutions for (insert your solution here) — so some defensibility and buy-in from industry would be very helpful.

Production, not pilots…unless your ASP is 1M ARR+

Team- has the team changed since seed stage? Have you been able to attract amazing talent? Are you getting more efficient?

Relationship — one area that would be important for me would be OUR relationship and interaction between here and there. We could be working together for a long time — how we communicate and collaborate during this next phase sets the tone for the long term relationship.

What other items come to mind for you? What’s missing here or would you disagree with?