OneTech Pre-Accelerator Week 2 — Identifying Your Key Financial Drivers & Metrics ⚖️
Every week Foundervine will be bringing you a regular update on our first ever Virtual Pre-Accelerator program for diverse founders. The Program is supported by OneTech and the South London Innovation Corridor (SLIC).
Week Two Highlights
This week kicked off with our guest speakers Daniel Tuitt, and Rodney Appiah. Daniel Tuitt works as a service and business designer with large scale corporates and helps them identify new business opportunities.
Rodney Appiah works as a Director at Private Equity firm Foresight Group, whilst also being one of the Founders and Directors of black angel investment group Cornerstone Partners.
Both Daniel and Rodney gave really insightful talks on funding, finance, and engaging the right metrics. We’ve included some of the key highlights from Week 2 of the Pre-Accelerator program below.
Choosing The Right Metrics
Daniel spoke about how when you’re starting up, your priority after trying to achieve product-market fit is focusing on developing the right metrics.
He explained how in the beginning, start-ups should ideally be only focusing on two to three types of metrics.
“Finding the right metrics is key, you can always iterate and always change. You can validate an idea based on assumption, and then start testing things out.”
Combination of Revenue Models
Daniel also discussed how different startups are valued, with European startups placing a high importance on achieving revenue whereas their American counterparts often place high importance on user numbers.
Using an example of Pop & Rest, Daniel was able to show how they are able to combine multiple different revenue streams seamlessly into their business to create extra value.
“It’s not just trying to find a direct customer, it’s looking around the whole ecosystem and figuring out the best way to serve your overall customer…..It’s about being able to identify different users, and provide value over time.”
Importance of The Right Price Structure
The final highlight of the week was Daniel explaining the importance of the right pricing structure and how to set prices for sales conversions.
“You can play around with different pricing models, and don’t be afraid especially early on.”
In this model, we can see how sometimes changing (or lowering) your price may increase conversions and lead to an overall increase in profitability or revenue.
Focusing on price, and not just volume
Another highlight from Week 2 was in Rodney’s ‘How to Model and Manage Cashflow session’. In this, he spoke about the three key aspects of a business model: revenues, cost and cashflow.
Rodney discussed the importance of managing these different elements of a business model and where founders can often fall foul.
“A lot of Founders don’t realise that they haven’t got their pricing right. So they are focusing obsessively on volume, but they haven’t been putting enough attention and focus pricing, so as a consequence that growth of revenue is not being projected out properly.”
Gross Burn VS Net Burn
In Rodney’s talk he also went through the cashflow forecast and spoke about the importance of managing your burn rate in order to leave more runway in your business.
“There are 2 types of burn: gross burn and net burn. Gross cash burn, or gross burn is the cost you incur on a monthly basis or the cash you would lose on a monthly basis if you sold no product whatsoever… Net burn is my revenue or my cash receipts in a month minus my gross burn.”
Here we can understand the importance of a burn rate to the overall health of a business, and how to distinguish between ‘gross burn’ and ‘net burn’ and the technical differences between the two.
Congratulations to all the OneTech and Foundervine team for another amazing week at the OneTech Pre-Accelerator Program. Keep your eyes peeled 👀 for our next weekly update.
Psssst.. This isn’t our only virtual offering 👩🏾💻👨🏽💻
The team has been hard at work planning and organising our One Tech Virtual Founders Weekend! We look forward to delivering more virtual content as not only does this make our material more accessible, we are able to deliver so much more!
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