How to Make Investors Love Your Business

11 Mar 2023 · 0 min

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0:23

In this brief segment, Dharmesh Shah advises founders to raise capital only when their business demonstrates strong unit economics—specifically, when a dollar spent on sales and marketing generates multiple dollars in customer lifetime value (e.g., $2‑$4). He recommends raising just enough money to fund the experiments needed to scale that profitable engine, emphasizing that producing cash and showing a clear return on each marketing dollar signals to investors that the business can efficiently grow. The core message is that a proven $1‑in, $3‑out ratio is a compelling justification for fundraising, as investors favor businesses that can pour more resources into a proven, cash‑generating machine.

If you have a business where you know that pouring a dollar into the business from a sales and marketing or whatever perspective yields $2, $3, $4 of lifetime value, raise money. Raise money, just enough to run the experiments that you need to because you should be pouring more water into that machine. You're producing cash. Investors love that. Investors love that. If you can put a dollar in and get $3 out, that's a perfectly good reason to raise money.