MAP Accelerator Program — Week 5
After four really, really busy weeks with tons of program events, this week was a quiet one. This is a good time to reflect on the progress so far and how participating in MAP22 has helped Solstice AI. But let’s start with a summary of the content this week.
VC Investment
Yes, another VC investment session. It’s good to hear advice from different people about the same subject. Everyone has a slightly different approach. And this week’s mentor made a very good point when he told us that 66% of all advice is wrong. He might be wrong with that advice :) — but overall I think this makes sense. Plenty of people offered us advice so far, but ultimately you have to decide yourself how and if you incorporate that into your business and whether the advice even applies to your company.
The main focus of the session was on the different stages of investment: from a seed investment round to a series A. The topic of valuation is quite important for this and it depends a lot on the business model. Different business models will have different metrics that VCs look at and use different multiples for determining the valuation. As an example, the mentor provided the figure of 67 million dollar profit per year as a decent estimate for a one billion dollar valuation of a SaaS business — using a 15x multiple on annual profit. Other business model will have different multiples or use entirely different metrics like revenue. And for earlier stages other values and metrics will matter, like revenue growth and customer churn rate (how many are leaving you after signing up).
We’ve also received some good advice on how to estimate the total addressable market (TAM). The mentor recommended a bottom-up approach, where you simply look at how many entities (people/companies) could be potential customers and how much are they willing to spend on your products and services. This makes more sense than what we did in the past, where we looked at the total transaction amount in our industry and took a percentage of that as addressable market, which now seems a bit silly and unrealistic.
Reflection Time
Having a quiet week without too many program sessions allowed us to really focus on the work. I’ve noticed that the participation in the program can take focus away from actually building the product and the company. It did help us improve our chances of success by providing us with useful advice in regards to many different problems we were facing and some we didn’t even know about. My main worry however is that due to the fast pace of the program, there’s very little time to digest the content of all the sessions.
Every week we get advice on different topics. And while I listen to the session, I make some mental notes (or sometimes digital ones) on what I need to look into to apply the advice to our own business. But then there’s very little time to actually execute on these aspects before the next session shifts my focus away onto a different problem. Reading through this blog series should give the reader a good idea how much there is to learn. And as if that wasn’t enough, I still have to focus on the day-to-day business.
All that is quite exhausting and makes it even more important to focus on mental and physical health, which reminds me of one of the very first sessions we had in the program. Additionally I have to stay focused on the long-term goal of building a successful company. One of the reasons why I’ve started this blog series was to have a summary of all the advice we’ve received so that in the future I can read through it again and get a quick refresh on advice regarding a problem I’m facing then. In theory that should allow me to not always have to address the advice immediately. Whether that works, only the future will tell :)
