The Startup Finance Basics No One Teaches You

Hi everyone, how's it going? My name is Anasik, I'm the head of partnerships at the Founder Institute. So glad you guys can be here today. We've got a very, very exciting session lined up for you all today. I think we had around 400 people sign up. I'm expecting 80 to 100 people to show up. Oh, okay, we already have 88 people, so Oz, no pressure, okay? No problem. Well, yeah, awesome. Look guys, I was super, super excited. I'm just gonna go over some housekeeping, uh, stuff and then I'll kick it over to Oz. But if this is your first time with us, uh, thanks for being here. We know, um, you know, it can be early for some people, late for some other people. We have a global audience. So first things first, I want to explain to everyone what this platform is. This platform is known as Airmeet. It can be a bit overwhelming sometimes, but let me just tell everyone where everything is. As you can see on the right-hand side, there's a group chat button. So you can say— I'll say hi everyone so you guys can see, uh, you know who I am. Um, so, you know, you feel free to use that chat to introduce yourself and just kind of throw in any information. So, you know, I'm based in Toronto, Canada. Uh, I'd love if any— if everybody else can throw in their locations. So Alfonso's from Crawford, Crawford, Florida. Uh, okay, so if everyone wants to throw in their location, that'll be good. This is a live event, it can give us some, uh, interactivity. Alice is from Berlin.

Cool.

Um, so that's the chat. Underneath the chat there's a Q&A function. If you can click that as Oz is presenting, throw your questions in there. Uh, the reason helpful is you can upload other questions and then we can just shortlist the most popular questions. I think we'll do the last 20 minutes of today's session around questions. Last but not least, at the bottom of your screen you will see some emojis— thumbs up, heart, wow, all that stuff. Please use that. It keeps the event engaging. So if Oz says something really intelligent, give him a thumbs up and everything, right? Perfect. All right, I got a heart. First heart I got in a year. Great. Uh, I think we're good. Uh, that's housekeeping. Uh, so in terms of agenda, we'll do 5 minutes of intros, 40 minutes of prep content, and then we'll open up for Q&A. So let me introduce Oz. For those of you who don't know him, uh, Oz is a very, very active member in the FI community. But like, um, I'm sure he'll give a very formal introduction to himself, but I can also just give a high level. But Oz is the founder and CEO of FutureProof. It's an AI-driven CFO platform for startup founders. He's got a significant amount of experience in the SaaS industry, and he's helped launch 6 startups, 4 of which have achieved profitable exits. He's a mentor and investor, also specializes in guiding early-stage entrepreneurs through challenges around financial management, fundraising, scaling, and offering practical strategies to improve cash flow and financial sustainability. All right, always welcome. I think we will drop his LinkedIn profile in the chat. Oh, sorry, one thing to also mention, everyone, after we're done with the Q&A, there'll be virtual networking. So you'll probably saw all these virtual tables when you joined in. You know, feel free to stick around after the event and network with one another. I think we're good. Maybe I kick it over to you.

Perfect. Hey, Han, thanks so much. Good afternoon, morning, evening, people from all over the world. I appreciate And the FI team for having me today and everyone for joining from all over the world. I'll dive in. So is my screen being shared? All right, perfect. So today we're going to be talking specifically around cash flow and how do you survive making sure you've got enough money to do this? Hopefully, there's key insights for you if you're a first-time founder. Even if you've done this before, it's always good to kind of have a refresher understanding how money movement works and making sure that you have enough of that to stay afloat and, and kind of grow your business. So as I had mentioned, you know, I've been at this for almost 2 decades now. I'm, uh, I run FI North Carolina, uh, built 6 previous kind of start, uh, SaaS companies. 4 of those had exits, uh, and now I decided, hey, let's do it one more time and explore all this AI stuff that's going on and basically built a financial operating system for specifically SaaS and e-commerce, uh, founders. Um, what we're gonna do today, just to kind of line things up, we'll kind of take a look at some foundational concepts, understand how money movement works, look at some metrics that matter, and those change depending what stage you're in, in the journey. The two different types of money, and when do you actually throw some fuel on the fire and really start growing. So if that works with everybody, we will take off. All right, so first I want to talk about things from a strategic standpoint. So, you know, if you're going through FI, you're going through different accelerator programs, you'll hear a lot about strategy and how you start planning. Uh, but a strategy is only as good as having an understanding of the financial plan that will help you go execute against that. Meaning that you can have in mind that I want to grow this much over the course of this year. And part of that may mean that I need to go hire a good strong marketing person or somebody that's going to run sales. Well, you need a financial plan that's going to back that up to say, okay, yes, I can afford to have the right headcount to make that a reality, or can have the right kind of marketing spend and ad dollars, events or whatnot to basically achieve the targets I'm looking to achieve. So if you're creating your strategic plan, uh, and doing so without a financial plan, then you're going to really be in some trouble. So, and I, and I preface all this because everything we're going to be doing today is around kind of the understanding the finances and the financial plan to help you execute whatever your strategic vision is. So some terms to have an understanding around. So Cash flow is the first one. Essentially, that's the movement of money in and out of your business. So every day, that's what's keeping your lights on. It's how much money do you have to stay afloat or not, uh, versus profit. That's actually after everything's said and done. So you've got revenue, you take out all your expenses, and what you're left with is profit. If you're lucky. If you're venture-backed, you've got, uh, outside capital, then maybe you just have a burn. And you're not profitable, which is very common in early-stage companies, uh, to not have any profits. Um, so it's just depending on what your business model is and where you're at in the stage of your growth. So what are some of the types of cash flows to be keeping, uh, in mind? So one is your operating cash flow, which is basically just that— it's your everyday, how the business runs, money moving in and out of the business. There's investing cash flow, which is going to be if you make some investments. Say, for example, if you're an e-commerce business, you decide to buy some machinery to help you bag your products so you can get them shipped out. Well, that's an investment you're making. There's maybe— it's going to be a cash flow that's either money going in, money coming out. So you can be spending money as well to achieve that investment you're making. And then there's financing cash flow. That's basically you're raising capital or you're maybe you've taken out loans, you're repaying that loan. So any movement around the financing side. So if you ever look at a cash flow statement, that's the 3 buckets you're going to see is operating cash flow, investing cash flow, and financing cash flow. And this gives you an understanding of kind of what those buckets are. Most of the time, early stages, it's going to be more of your operating cash flow. This is your money every day. Going in and outside the business. And you want to stay on top of that to make sure that you're in a position where you actually have more money coming in than going out. Profit, on the other hand, there's 3 types of profit. The gross profit is going to be your first kind of bucket. So this is, you have your revenue, the cost of delivering that product or service, Once you've achieved that, that's your gross profit. So whatever it's— if it's a SaaS business, you deliver a service, the cost of revenue is— but your gross profit is your revenue less that cost of revenue. If you're doing a product business, it's the cost of goods sold less that. That gives you your gross profit. After that line, what you have is your operating profit. So basically, what's your operating expenses? That's your salaries, your ad spend, your rent, utilities, everything that kind of operationally you need to spend money on to run that business. And then what's left after that is kind of your operating profit. And then at the very end of it, if you've got interest and taxes and those non-operational expenses, those come out. And the very bottom, you've got kind of your net-net, your net profit. So we'll take a look at what that means with an example. So say you start off January and you've got $10,000 in revenue, $2,000 of that comes out of as part of cost of revenue. So you've got $8,000 of gross profit, and then your operating expenses takes out another $6,000, and you've got essentially $2,000 of net profit. So that's basically a nice profitable business. And if you extrapolate one month further out and say the next month, say February, that operating expense goes up And now you've got a burn where you've got— you spent a little bit more money than you actually had available. So that could be getting in trouble depending on how the business is performing. So if you look at this from a positive cash flow example, so you take this over 3 months and you say, okay, the first month you had $2,000 in profit, well, that carries over starting the next month. So even if you have that $1,000, that's a negative. You're still okay because you had that $1,000 that you're pulling out of that $2,000. So you're still left with the $1,000, which you're going to have those ups and downs with operational expenses, which is fine as long as you're going up and down and coming out ahead. So month 3, your OpEx went down and you actually had a little bit more profits. You're left with $4,000 in profit. Where you can get yourself in trouble is if you're not getting a handle on this, and that, that third month you had another high expense month, and now you basically are out of money because your, your burn ate into all the money that you had left. So that's what you're trying to avoid, which I call the drop dead date. So you're always wanting to think from your runway standpoint, what is your drop dead date, and how do you keep pushing that further and further out? As you're thinking about fundraising, you're thinking about, okay, well, this, and you probably heard this if you're here, but kind of from a fundraising standpoint, you know, if you're going to raise this much money, how much runway is that buying you? Is it buying you 12 months, 18 months, 24 months? Because they want to understand, is based on how you expect that business to scale, uh, factoring in revenues and expenses, when are you running into your drop-dead date? How far are you pushing that out to? Um, so if you're doing that with fundraising, great. Uh, if you're doing it with sales and that you're generating customer revenue, that's even better. The best dollar you can raise is the one you get from your customer. So as you look at expenses, you're going to have fixed expenses and variable expenses. Um, fixed expenses are going to be the ones that aren't changing. You're going to expect it month over month. Variable expenses is becoming even more prevalent now, especially in this day of AI where you've got variable costs. The LLMs are fluctuating, everybody's going out building these businesses using tons of LLM, tons of tokens, but you don't really know, you know, how much is that going to actually end up costing you. So there you're starting to see different, you know, companies doing— using tokens, using usage-based modeling to factor in, okay, well, they're trying to make sure they have enough revenue to cover this variable expense of the LLMs. If you're not factoring that in, you just need to make sure you have enough of a cushion that you can say, yes, I can expect this variable fluctuation, but I'm factoring that in and I've got enough revenue that I'm generating that's going to cover that. So from a unit economic standpoint, the math makes sense that I'm not looking at the tokens or the, the consumption of credits and stuff that way, but I'm charging enough that I'm still running a healthy business. So what are some of the metrics that, that matter? Now, when it comes to metrics, once again, it's going to really depend on where you're at in the business. There's, uh, so many different metrics, uh, to consider. Some may skew towards SaaS-based businesses. E-commerce has its own set of metrics like contribution margins and ROAS, and there's— has their own terminology. Some of the ones I'm covering here are going to probably more that you'll see on a subscription-based business, whether it's like a true SaaS or not. Which is going to be kind of your recurring revenue growth. So MRR is your monthly recurring revenue, and that tells you, you know, are you growing and when should you be concerned about this? So that's one of the metrics you want to start looking at. Another is the net new MRR. So are you actually growing kind of month over month? What's, you know, that's factoring in the churn you may get. So you may have a 5% churn, but are you actually generating more more new revenue, more new MRR after all that churn's factored in. And then it's all— there's a net retention rate, that's the NRR. That's letting you know, is that customer growing? Meaning that, you know, they landed with one product or service offering that you have, but are they organically saying, yes, you have other products or features that they want and they want to grow to that? But that's something else to consider when you think about as you're building your businesses. Are you building a one-product business? Are you building a one offering business. If you are, then the math around that from a standpoint of, you know, how do you grow and scale becomes very difficult because you spent money to get that business. Now, long as they stay with you for a long enough time, that's your lifetime value, that's fine. But if not, then it's going to get very expensive, meaning that you're spending a lot of money to, to get that customer, but you didn't give them enough ways to grow with you and give you more of their kind of wallet so that you're actually recovering that cost of acquisition faster. So that's why if you look at the next metric, which is the, that LTV to CAC, that's your lifetime value compared to the cost of acquisition. Does that math work? Are you spending enough to get the customer and not so much that the value of that customer that they're going to share with the dollars they're going to give you or the money they're going to give you over that time Is it justified for the acquisition? You know, if they're giving you 5 times what it costs you to get them, great, that's a good number. If it's less than 3, then the math's really probably working against you. And some of these metrics, like I said, is going to depend on where you're at in the stage. If you're very early stage, you don't really know your, your lifetime value because they haven't— you haven't been in business long enough, they haven't been with you long enough to know that. What's probably more important is the CAC payback, which is how long do you How long does it take to get that money back? That's letting you know, do I— if you can get it back in 6 months, then you have money again to put back in getting the next customer. If it's taking you 12 months, which is still considered pretty acceptable, that's considered good. If it starts taking you longer than that, 18, 24 months, that means you're gonna at some point have to get either outside capital or some way to fund the cost of getting that customer. And then you have to really factor in, okay, if I spend that much, if it takes me almost a year and a half, 2 years to break even on that customer, are they really staying with me long enough to justify even getting that customer? Maybe that's either the wrong customer or the price point is off and I need to charge more to justify it. Or maybe my offering is— and the messaging is wrong so that I'm not getting them for a cheaper price point, or the channels I'm looking at is too expensive. Uh, if you're looking at ad spend, that's some of the most expensive ways to get customers. If you can unlock ways to get— acquire a customer for a lot less, that's going to overall blend with all your other channels and come out to be a lot more cost-effective way to get that customer. Gross margin goes to, from what we're looking at earlier, that cost of revenue. So what does it take to deliver that service, and is it a profitable way of delivering the service? If it costs you so much just to deliver the service, then anything you're spending on that side is minimizing how much you've got left to spend on the other operational expenses. If you spent 40% on just delivering the service, that means you only got 60% left to cover the cost of actually operating the, the business. So you want to make sure Ideally in a SaaS business, you want to be probably somewhere north of, uh, 80% margin. So basically 20% of that cost of revenue is just to deliver that product or service. Uh, that's healthy. E-commerce is different. Uh, you're looking at probably more like 40%. So, uh, 40% in the cost of goods and, um, your gross margin sitting around 60%. So each type of business will have its own kind of math around it. You just have to understand, you know, what is the right benchmark for the type of business that I'm in and the services I'm offering. Uh, your burn multiple is just, you know, how efficiently are you kind of running the business. Like I said, some of these probably less of a concern, uh, depending on where you're in the business. Insurance, um, Are you making sure that you've got customers that are happy and staying with you? The net retention number factors in churn, but if you only looked at this number, it can basically kind of create a blind spot for what the actual business is doing, meaning that if you're doing really well, that you've got, like, say, 120% of expansion going on, and you don't look at the actual churn number. Maybe this could be sitting at, you know, 10-15%. You're just doing— you have so much that you can grow the business that you're not looking at the actual churn. Well, this is an easy way. If you can go address the churn issue, that you're going to really expand the, the purchase percentages numbers here. So these two numbers kind of go hand in hand, the net retention rate and the monthly churn. You want to be looking at both because this one will hide the other. So you want to look at this somewhere to see, am I actually delivering a good product and good service, and they're getting good enough value that they're staying with us, and not that we just keep selling them more stuff? So, and connecting some dots, uh, you know, we talked about this a little bit ago, you know, if you've got a high, uh, monthly recurring revenue but low net retention rate, you know, you may have a bucket, meaning that you're generating a lot of new sales, but you're not keeping them, or you're not giving them a path to grow with you. So you need to fix that kind of retention piece. Once again, if you can have a great LTV to CAC, but it's taking a long time to get that back, well, you're gonna at some point need more money to actually scale that business because you're just gonna run out of money. That payback period is what your cash flow has to cover. So you want to make sure that you have enough capital that you can keep getting the next customer. And ideally, if you can get to the point where you've got a kind of a good high-margin business and you've got a strong retention rate, then you've got a nice machine in place that can really grow. So, you know, we looked at, you know, some things are concerning all the way to excellent. You're not going to hit excellent everywhere, especially not in the early days, but you want to say, okay, well, this quarter, I'm going to go focus on this metric. And how can I move the needle here? And if you do just even one metric a quarter, you know, in the end of one year, you've probably moved the needle quite a bit. And another thing to think about when you look at kind of metrics, some people think, well, we're kind of early, maybe I don't want to look at this stuff yet. Well, for some metrics, yes. But for probably some of the key ones, you're never too early, like your actual recurrent revenue, you wanna be looking at that very early on because that's really what's gonna decide, do you have the right signals to go raise capital, to scale the business, and are you basically selling something that somebody wants? And metrics, they think will kind of improve at scale. What happens usually is that if you're not staying on top of it, it just becomes harder because the unit economics, the way it's working, it's just kind of working against you. The earlier you can get a handle on some of that, because a lot of these are going to be not only you're looking at the metrics, but it's really behavior and process driven. So if you haven't done the right kind of steps in place from a process level and the right behaviors from you and the team, then it's just much harder to make that leap as the numbers get bigger because, you know, everything is going to get impacted at some point, meaning that you're going to have more people on the team. You've basically trained the people maybe inefficiently. So the next person that's coming on is doing the same behavior you had, and the problem is just progressively getting worse and harder to overcome. So getting ahead of all this stuff earlier is actually going to help you. So the different types of money. So I bucket things into essential buckets. There's mistake money and growth money. And mistake money is It's— this is good money. This is the money you want to take. You just have to understand what the use case for that money is. This is when you're really trying to just run experiments, and you're doing a lot of learning at this stage. You don't know what's going to work yet. There's a lot of kind of hypothesis, best guess. You're going to learn, uh, we're going to run very lean because you're really just trying to buy enough time to test out things to see how well things are going to work, and you're trying to figure out what's repeatable and what's the right channel, what's the right messaging that's just gonna get that flood of traffic coming in and getting those sales. So what you're essentially funding here at this point are the sales and marketing mistakes you're gonna make and, and, and having zero kind of expectations that there's gonna be really, uh, an ROI on that at this stage. As you get into the growth money, that's where you want to, okay, now I'm trying to understand, you know, what's scaling, what's working. I figured out the models, the channels, and that's where I want to start putting some money behind. I'm willing to spend more money because now I'm not trying to just buy time, I'm trying to buy more market share. And my kind of metric around that is, okay, am I getting— for every dollar that I'm putting out there, am I getting, you know, $3 back, $5 back? Do I— am I getting a multiple on that investment? And now I'm just trying to find, you know, what's been proven. And maybe I tested 10 different things and I found 2 channels that really work, okay? And what's the return I can get? That— can I get 3 to 5x return on that particular channel against that capital? So it's okay to have mistake money, and it's okay to have growth money. Just know what you're raising for if you're going to go raise money, meaning that If you raise a lot of money and you're in the mistake money phase, you're basically taking a lot of money and experimenting with, uh, which may work for you, but it may also work against you. So ideally you want to take small amount of money, go through that mistake phase, and when you've proven out some stuff, then go for the bigger money, uh, and then grow with that. I've seen far too many people take, you know, larger sums of money and they're just burning through it. Because what that typically does is you're, you're not running lean, you're, you're over-testing, you're, uh, you're being kind of, uh, either going too wide, uh, and not being kind of, uh, creative in how you're doing your experiments and stuff. So the less money you have at this phase, you're going to just be smarter with the money and you're going to really uncover some key learnings, then you're going to be in a far better position to demand kind of, okay, well, we know what's working, let me go after the big money. So both are good, just know what phase you're in and use capital efficiently based on that phase. Another key kind of mistake that I've seen is, you know, speaking of kind of that, like, say you're gonna do that $2 million round, is what do you do with that money? One of the traps I've seen is they immediately start going hiring people and they increase their burn considerably, and it's really shrinking their runway. And what happens as a result of that is the next round just becomes harder and harder because now if you don't have the right kind of traction, you don't have the right story to tell, you're not in a good spot versus If you take that same amount of money, be more strategic, strategic with it, keep your burn down, you have a lot more runway to work with. This also gives you more time to figure out and show the, the right kind of traction and tell the right kind of story. And you're, and you're basically going to that next round from a position of strength. So when you look at early-stage companies, what are things that can get in the way? What are some killers along that? So one is you start raising some money and then you start hiring as a result of that, which I just kind of mentioned a bit ago. Uh, and the idea is that, okay, well, I'm going to grow into the team, I need to get ahead of that and just start bringing on those people, start looking for talent. Yes, always. As if you're a founder, you're always thinking about talent, you're always kind of scanning, you know, where do you meet people? Who do I know? How do I start planting seeds, um, kind of vetting out people to say who would I want on the team to get me to that next level? But doesn't mean you go hire them. Payroll is going to be your biggest expense. So the— if you're spending that money and spending it way too fast, too early, and especially in 2026, I mean, this is an era where you can actually go to anybody and say, can I bring your expertise in from a fractional standpoint? Now you can basically get the exact information you're needing, the skill sets you want, for a fraction of the cost. Uh, so I would highly recommend doing that rather than bringing on and actually adding somebody to the payroll. The next is confusing bookings with cash. So depending on what type of business you have, some— if it's just, you know, a credit card business going through Stripe, that's one thing, you're getting that money right up front. But if you actually do bookings, meaning you're As you're sending out an invoice, you're booking that business and you've got like 30 terms. Well, bookings doesn't equate to cash because you may not get that money for another 30 days. So you need to make sure you're factoring that in because your cash position may not be what you think it is based on the bookings alone. So you need to be tracking that separately and making sure that, okay, when— what are my bookings number, but what does it match your cash position? The next is, and we touched on this earlier, is around kind of that CAC payback period. If you're not aware of how long it's taking you to get that money back, um, you just, you just end up needing more cash. So the better you can, uh, find a channel where that payback period is shorter, the faster you can get the cash back so you can go get the next customer. Annual vendor contracts. So, you know, Black Friday, it attracts everybody including founders for software deals. Maybe that's probably the only time the math probably makes sense when you're earlier stage, if you're getting sometimes like 50% off. But still, be very mindful of this. If you get locked into an annual deal, those discounts in the early days may look attractive, but it's tying up your cash, um, and you want to be very kind of particular about when you're locking that in. Um, and you know, when you get later stage, when you have a board and stuff, uh, it's quite often times where you have to go to— for anything like more than a year, you have to go for board approvals to do 2-year, 3-year deals because of the impact. And you know, the board understands, investors understand that, okay, sometimes the math may make sense, but other times That's a huge significant locking up of capital, which is why you're getting some of the discounts you're getting. But when you're early stages, that flexibility is going to be a lot more valuable to you with, you know, having that cash when you need it versus I saved, you know, 10, 20, 17% in a discount. The next point is having a cash buffer, what I call kind of sleep well at night number. So you need to know what that number is. And typically it's probably having 3 to 6 months of runway so that you know, okay, I've got that much cash buffer available that I can sleep well at night knowing that the business is going to stay afloat. Um, so factor whatever that is, you know, some may be able to go down to 60 to 90 days, uh, that's really risking it, but you need to just have a buffer in place for that. The next one, the— it goes back to, I guess, the point around invoicing where, you know, I mentioned the 30 days. Typically you'll have a net 30 on your invoice, but you'll find that most companies are not paying, uh, till 45, 60 days. I remember one of the companies I was working with, a big publicly traded company, uh, when I talked to the procurement department, that said the only, only vendors that get paid Under 45 days are anything that keeps the lights on. So basically utilities companies, everybody else, even though you give them a net 30, they're not going to pay it until 60 to 90 days out. That's just their internal policy. They've never openly shared that with folks until you call looking to collect. So factor that in that, you know, when you have an invoice out there and you're giving them net 30 and turns into 60 or 90, You're basically financing them. You're basically taking on that, that role of being the credit card company that basically is, uh, giving them free capital without charging them interest. That's why sometimes you'll see if they're— people put in 1%, uh, fee for anything past 30 days for net 30. Has anyone really ever collected on that? Probably not, but it's— the idea is there is to deter people from taking too long to pay you. But the mindset is just that, that, but, you know, if I'm going to basically bankroll your time to pay me, then I should be getting at least some additional money for that. And that's why we would put on like a 1% fee or something. Lastly is when you start doing your planning is to, you know, it's easy to put on the rose-colored glasses and say, okay, what's the best possible cases for the business doing well? But you need to be modeling the worst-case scenario. What happens if you don't land this business? What happens if you had to go a whole month without sales? In fact, I've seen recently a private equity-backed company went a whole year without a single new customer. They just grew from the net customers they had, just expansion revenue, but they didn't get a single new logo. They needed to make sure— somebody, the CFO, needed to model that in. To say, okay, what happens if that's the case? So when you're, when you're thinking about modeling your business, you need to make sure that you're factoring in this, uh, you know, what's survival mode? What's that mean from your expenses standpoint, from a headcount standpoint? Where do you cut? What happens if everything just comes to a grinding halt tomorrow? So it's not the, the fun thing to do, but knowing that you figured out that strategy and played out that scenario is going to really help you sleep well at night. Knowing that you at least— it's not— you're not getting blindsided by it. So now that we've looked at that, what about when do we start actually growing? What— when do we start throwing fuel on the fire? So some signals will start telling you when the, the timing is right. So we'll look at some of the metrics that give you that indication. If you've gotten that CAC payback period to less than 12 months You know, that, that machine is in place that if I'm sending out money to go get, acquire that customer, I can get it back fast enough that I can go get the next customer and I can scale it. Uh, the next one is that LTV to CAC, meaning that the type of customer I'm getting, uh, they're going to stay with me long enough that, uh, it's worth it for me to go spend the money to get that customer. So the math's making sense from a unit economic standpoint. Uh, then I can get a lot more aggressive on the growth. The net retention revenue is over 100%, meaning that I have a path in place to grow that customer over time. So they may land with me at $100, but I have a path to grow them to $110, $120, $150 over that time that they're with me. Uh, having a repeatable sales motion. So if you— some may be product-led companies, then you want to make sure your kind of product-led journey is repeatable. If you're doing sales-led, then you need to make sure that the sales-led motions are repeatable, that you have a process of, okay, uh, the way you're telling the story, the process of how you book the appointments, show the demos, and land the customers, uh, that whole kind of cycle is repeatable. and people can hopefully hit their quota and exceed it. That you've figured out the acquisition channel where your ideal customers are coming from. Uh, and this, like I said, this takes a while. Is this why you're going through that whole mistake money journey, is to figure out where is that channel? Some, for some types of companies, maybe it's they find that, you know, Reddit is the best effective channel to find that customer. For some, it's trade shows. For others, it's just through paid ads. Hopefully you can find a better channel than that, because over time, it's just the math will never really support that long term. But it's maybe a good channel to get the ball rolling. Maybe it's just an SEO play that you figured out that I can just drive enough traffic in. And, you know, HubSpot did that well. They were the kings of They wrote the book literally on inbound marketing. So they built this whole machine, they didn't buy it, took them a while before they ever even had their first salespeople. And Zendesk was another company that went— they went many years, I think almost 30, if I remember correctly, like 35,000 customers before they even hired a salesperson. They just had such a strong machine for inbound. Granted, times were different in those eras, got much harder. But same kind of strategies do exist. It's just finding new ways to, to tap into those channels now. And then product market fit makes basically that, you know, you know that you've, you've solving enough of a problem that the customers are pulling you to, you know, the next feature to deliver the, the next set of modules and stuff you want you want that, that customer to be so excited about what you're doing that they would complain if you were gone tomorrow. That's when you know you really got a good product-market fit. And that you've stabilized churn, meaning that, you know, when you're spending that money to get that customer, they're, they're staying with you. You're not basically just getting them and there's leaky bucket because they're churning them out every 3 to 6 months. So if you can get that under 5%, you're going to be in a good spot to say, okay, now, which when you look at all these, maybe it's not all 7, maybe it's a combination of them, but ideally you want to move towards hitting kind of all 7 of these signals to say, now the dollars I'm putting into the business is going to really help me grow and not be wasted efforts. So That covers kind of everything we've talked about. I'll share a lot of the stuff we talked about is I built what I— the reason I built Featureproof was to take all this kind of data points, build it into one platform so that it automates a lot of that for you and gives you all that visibility insights into it in one place. So I want to open it up for questions.

Hey guys, sorry I had to hop back into the different rooms. Oz, thanks so much. Great, great presentation and a lot of golden nuggets. All right folks, what we're going to do is, if you can see in the Q&A, there's an upload button. Let me remove your, um, your thing. Okay, perfect. And what I'm going to do is I'm going to show the question on, on stage, and then, um, and then you can answer it, and then we'll go through. So we have about 15 minutes, so yeah, just time your responses accordingly. So, uh, this had a bunch of upvotes, so let me show this. Uh, Karen from Germany is asking, how do you price a new innovation product which has no market benchmarks?

Yeah, uh, you know, anything new, it gets trickier because you're, you're starting with a hypothesis, um, and you're gonna probably go through many different iterations along that. Um, you know, if you can start with a small group of folks that you can know, you're kind of beta people start asking them what do they value in that. Um, because, because pricing, you know, you can come at it where I think it's at, uh, I want to charge this much, uh, and part of that's going to be factoring in that, okay, well, I have to kind of charge at least this much for the math to work. The other is what's the market going to bear, uh, and part of what the market's going to bear is basically on how you're telling the story. So if you have figured out how to tell the story in a way that creates enough value that you can charge that amount, then great. And part of that has to be having those conversations with folks to understand that, that customer and the person you're trying to solve that problem for, uh, there is going to be insights you're going to take from there so that you understand how to do the positioning. So you can start off when it's totally something new, but it's new from an innovation standpoint of how you're building it, not from the pain. The pain may have not existed or maybe not as prevalent, but there is a pain and there's a price they'll pay to solve that pain. So you want to have those conversations so you understand, you know, what is it, a €1,000 problem? Is it a €10,000 problem? Do you want to, you know, figure out what does it take to solve that and what's the threshold where it's still enough that they'll go take action on and say, yes, I'll go spend that money to solve it or not. So, you know, there's the benchmarks, so you can try to take adjacent market benchmarks to kind of give an idea. So say you're going into procurement, and if there was no data on procurement, but there's some adjacent stuff around accounts payable or expense management stuff, you can take adjacent data to look at what is the, the, these ancillary kind of problems that are being solved and how much they're people paying for, uh, and then look at what you're building and the problem you're solving. Is it encompassing some of the other stuff? Is there an overlap with kind of adjacent spaces? And for that, maybe you're justifying a higher price point, um, or is it, are you just as narrow and maybe you need to say, okay, well, the market will bear, you know, $50 for this, $50 for this, $50 for this, and because you're solving 3 kind of siloed problems, or there's 3 different vendors solving 3 siloed problems, and each one is gonna take so much out of that allotted budget to get that problem solved. Perfect.

Thanks so much, folks. I'm going through some of the questions here. Can you try to— if you're asking a question in the Q&A, either upload a previous one or try to make it a little bit specific. Because some of the stuff seems to be generic, but I'll still go through them, uh, just for trying to make the best use of everybody's time and just to make like also just to get insights from us. Um, let me show this one. So Leslie, uh, from— where are you from, Leslie? Leslie from Cape Town is asking about what metrics are the strongest correlation with actual cash survival in the first 12-month, not just around investor attractiveness.

Yeah, I'm a big proponent of cash, uh, the, the CAC payback period, uh, because you're going to spend money to go get customers, but if you're spending too much to get that customer, you're gonna run out of cash very quickly. So that's probably the key thing, uh, that I think people just don't look at enough. Is, you know, how much are you spending that money to get that customer? And, you know, are you— how quickly are you getting it back? I mean, that, that's the, the 6 or 12 month window. That's where you want, uh, to look at, uh, and just keeping an eye on the runway as a whole. So I mean, just looking at your expenses, uh, as a whole, um, so you know what your burn is over time. Are you in a good spot that, you know, you can— you have enough runway? So like, what we built in, in the platform is something called a founder view. The founder view literally gives you one view that shows you exactly your drop-debt date. So based on all the actuals and your forecasts and stuff. So it gives you one view to say exactly which month you're going to run out of money based on how things are trending. So that's the view everybody's kind of usually keeping an eye on because at least, you know, I need to either get more sales before then or I need to go raise money before then.

Perfect. Thanks. I really like this question from Kai. Or Kaylee, uh, from Lithuania. I don't even know where that is. But if you're not spending on marketing and you're doing founder-led scales, so how are you calculating CAC? Is that like against the founder's salary? Like, what's your two cents on this?

Yeah, I mean, your CAC is you then, right? There, there's always some expense to acquiring a customer, meaning like if you're not To say zero on marketing, that means you would have what, no website? You don't have, uh, any ads you're spending money on? There is— you're not spending any money on writing content? If you're doing all that yourself, then it's really your time. Okay, um, and you can— and you may not even be paying yourself. So you're thinking, okay, I've got zero CAC because I, I don't pay myself, I don't spend any money anywhere else, I just get customers. At some point you want to sit there and say, okay, well, I— my time is worth something, uh, and if I'm doing— because you want— the way you want to think about is like, if I was doing something else with that time, what's the opportunity cost? Okay, I can go do X or Y. It's only worth it for me to do X because the ROI on that X.

So also, you also have hard costs. Like, if you're doing founder-led sales and you're doing like LinkedIn, there's a Sales Navigator costs, there's content creation costs and stuff, right? It's not just, um, not just the time. I'm sure the time is probably like 90% of it, but there's all this like actual things to get done, right? There could be a virtual assistant to help you organize stuff, right? Like those are the things that will go into it.

Yeah. And even if you said, I'm not doing any of those things, I'm not spending a single dollar on any software, then there is still you, uh, that's That's the cost. And at some point you have to figure out what your cost is worth versus how do I— does it make sense to outsource some of that to— I am— for— does it make sense to bring in a VA? Maybe because you've kind of gauged what your cost is worth, you can say, well, you know, if I can get somebody for $5 or €6, then it's worth it because my time is better spent doing X, Y, or Z versus they can go do this instead.

Sure, I'm going to bring up this question. Maybe you can talk about your journey at FutureProof, uh, you know, pre-MVP phase when you're out there trying to raise money, pre-revenue. Maybe like, do you want to talk a little bit about what it took for you to raise, um, uh, at MVP or pre-MVP stage?

So it's, you know, it varies. If you're a first-time founder, you've never done this, it's going to be different than if you've got a network and, uh, and you've just kind of been doing this for a while. So I mean, that, that's gonna make a big difference. If your first time, then trying to raise money pre-revenue, all that stuff, depending where you're at. I mean, SF is still— last time I was just there a few months back, it's, it's still in its own little bubble. Being like, I met somebody that was raising 2.8 million just off an idea. Um, so things you can do in SF that doesn't always hold true, and maybe New York you can do some of those things that don't hold true elsewhere. So geography matters, uh, what you're taking to market with you, what you're— the idea you're trying to solve, the problem you're trying to solve matters, uh, your network matters, uh, and your prior experience matters. All those kind of get factored in. Um, and if you have all those in place, it's going to make it much easier for you to raise money. If not, then either— that's why people still move to SF. It's like, okay, well, it's much easier because you're sitting in SF.

So I totally agree with like— and also the thing, just so everybody knows on the call, like what we're telling our founders is that it's very hard, like especially in the age of AI, like to raise just off an idea. Unless like you're a repeat founder, but the expectation is you have an MVP, you have some customers, it's validated, like you're showing that there's a heartbeat. If you have that, like, and fundamentally if you have like a decent product and it's vertically integrated, like you kind of check all the right boxes, but there's a certain amount of competition, so you have to be aware of all of that. I think that's the way to think about it.

And timing. I mean, you know, last year was a little— you could basically say the word AI and you're getting money. 2026, not so much, because everyone just has become table stakes very quickly.

Yeah, that's true as well. All right, we are at 56. Maybe we'll do a couple more of these. I'm just saying here, this is— so Ishma, From South Africa is asking about, hey, for bootstrap first-time founders who are cash flow conscious, how do you know that they've truly found your best channel without burning thousands and testing everything?

This goes back to probably, um, you're not going to know from an LTV to CAC ratio because it's too, too early, but it's, uh, uh, I would do probably combination of two things. One is, uh, just the CAC payback period, so you know that you're getting the money back. And then just talk to the customer, you know, understand what it is, you know, why they chose to use your product or service, what are they— what problems were they going to solve? Is there a good match? You know, in the early days, uh, it's all about kind of customer discovery, understanding, you know, what it is that you're helping them with and what— does it meet the expectations that they— are they trying to make some— your solution fit for the problem or does it already solve it? And the more you can kind of uncover around that, because you'll also help you figure out your next roadmap as to what do you want to build next. So it gives you kind of a pathway to say, okay, now which we're talking about the net retention stuff, like how do I actually grow that business? Can I offer the, the next product, the next feature, charge money for it and grow that, that business as well? So if you're bootstrapped, you want to sit there and over time, get as much money as you can from that customer because it took you money to get that customer. So how do you maximize that? So if you can, you know, get the money back as quick as you can, and then if you can give them, you know, enough offerings that you can grow that business, that will also help you get that money back faster, then you know you've probably figured out kind of the right channel. And is the cost of that channel you know, making sense that, and those will fluctuate, you know, sometimes, depending how the messaging is, you may find that one channel works better because, but if you change the messaging, a different channel is going to work better. So this goes back to that mistake money era. So you're testing, take the same message, try it in different channels, see what's resonating, and what's getting you to— sometimes speed also makes a difference. If something's We're running right now an ebook that's just taking off so well on Meta that I would not have expected that for us, this how quickly people are signing up. So that is just becomes another indication as well.

Perfect. Let's do the last question and then we'll break out for networking. Oz, are you gonna stick around for networking?

Sure. Happy to.

Cool. Perfect. So then everyone, I think you can find Oz in the tables and ask him, but I like this question from Kisa. From Bowie, United States, is asking, any suggestions for moderate growth projections at early stage to build up first-year projections or goals? Like, what are people looking for? Like, I think you're in the midst of your round or you're finishing your round. Like, what's, what's, what's the word out there? Like, what do people want to see when they— do they want to see a 20% month over month, or they want to see 5%? Like, and what should founders be modeling? Well, ideally they should be modeling it based on their market, but like Yeah, yeah.

I mean, so this goes back to storytelling. So you, when you're doing your models and stuff, you're, you're, you're having to tell the story. So you're, you're coming up with an idea of like, okay, this is what I think is going to happen. Then you have to figure out how you're going to defend that story and what proof points do you have to say that yes, this potential model holds true. So Is it because you've gotten some early signals, you've unlocked some channels that say, okay, based on this, the math, what I'm showing you makes sense, or the problem set that you're solving for, that you can see there's enough kind of traction and you can see that where things are headed, you're getting ahead of it and you're showing a model that's maybe 3 to 6 months ahead because of the way you're thinking about things, you're getting ahead of where the market's currently at. So you, you can, you know, model and show anything. It just becomes, you know, how are you telling that story and how are you defending that story around it? Perfect. That's probably what it's going to come down to.

Thanks, Alex. Look, appreciate you taking the time and walking founders through all this valuable intel. I guess as a closing thought, what is the one thing you want to leave the founders with today? Like, we're in March of 2026, AI is upon us, it's changing how we fundraise, it's changing how we interact with, uh, businesses and interact with each other. What's the one piece of advice you can go and give them? And folks, keep in mind, Oz is like equally in the same position. He's a bit more polished because he has a few exits under his belt, but he's a founder out there like hustling, doing the work.

It's funny, It's funny you say that, because people ask me like, oh, has it gotten easier? No, the world keeps changing. All the playbooks that existed, you know, 2 companies back, even 1 company back, they don't hold true anymore. Literally in the last 12 months, the world's changed that much that it's like, yeah, some of the fundamentals are the same, but the actual playbooks, it's all being reinvented and recreated as we speak. So that's what I find exciting about it. It's nerve-wracking and the pain helps you lose sleep at night, but at the same time, You know what, you're getting into this ride for a reason.

You got to love the chaos. If you didn't sign up for the chaos, go work your 9 to 5. This is awesome. Thanks so much for sticking around. Show some love, everyone, emojis and stuff for Oz. Feel free to connect with him. I think what we'll do now is we'll break out for networking. Let's leave that up for about 30 minutes and then Hopefully everyone got value for this. Tell everyone you— to attend an FI webinar. We do these a couple times a week and stuff. Um, all right, well, let's— we'll break out for now. Thanks everyone, enjoy the rest of your day, and we'll—

thanks everyone, bye.