Every forecast takes a number today and multiplies it by a story about tomorrow. Your valuation is a function of a forecast, and the multiplier determines the ultimate outcome. Yet many companies make mistakes that prevent them from telling the best story about their tomorrow. In the later stages, we see a few common ones: - failing to launch a product with enough time to prove customer demand - hiring key executives too close to the transaction, leaving their impact unknown - expanding into a new vertical without considering personnel or capital needs These decisions are either not made at all OR made too close to a transaction. There are two guidelines I like to share with companies in the ~$20M ARR range: 1. Conduct interviews with existing customers and begin ideating on future products or features then follow it up with a whitespace analysis with the goal of seeing a path to $100M ARR. This has to start earlier than you think. 2. If you plan on fundraising or exiting, ACT on the key decisions mentioned above at least 9-12 months before the process starts. That means product launched, executive in the seat, etc… When you expand or make a critical decision too close to a transaction, it makes the underwriting process for investors far more difficult. That process is an exercise of storytelling. In growth investing, we have the benefit of data. But we also have to believe a story about the future. Often, that story revolves around market size and team execution. If we combine two of those ideas: data and market size, a product or market launch 6 months before a fundraise answers neither. We don’t know if TAM expanded because we don’t have the data. It requires perfect execution to get credit in the underwriting process. If we combine data and execution, a key executive hire 6 months before a fundraise creates a narrow margin of error where any misstep creates uncertainty for investors. Even the best executives need time to absorb and execute. These are self-inflicted mistakes. In today’s market, investors are underwriting more conservatively and if you create a reason to discount future revenues we will take it. Ironically, if you’re considering a fundraise or exit, you might be better off waiting if your core business is strong. Why? Because investors can tell themselves their own story which creates an anchoring bias and false sense of certainty. “The core business is great! What if we expanded wallet share with a new product?” “The team needs a new CXO. We know people that fit this profile in our network.” “Imagine this product in X market. I bet the growth would be similar.” When you leave it to the imagination, you create ownership amongst your target audience and with the right partner gain someone who can help you make these key decisions. All of this creates “upside” which makes base case feel more conservative and that’s a positive for investors in a growth market where conservatism rules the day.