15 Key Questions Venture Capitalists Will Ask Before Investing In Your Startup - Forbes
- 15 Key Questions Venture Capitalists Will Ask Before Investing In Your Startup - Forbes
- Startups Weekly: Lessons from a failed founder - TechCrunch
- Startup Nikola Bets Hydrogen Will Finally Break Through With Big Rigs - Forbes
- How do startups actually get their content marketing to work? - TechCrunch
- #StartupWrap: What Did You Miss about Indian Start-ups this Week? - Entrepreneur
Posted: 13 Apr 2019 09:13 AM PDT
By Richard D. Harroch and Larry Kane
Venture capitalists make decisions constantly about whether or not to invest in various startups. The majority of the time, the answer is no. There can be many reasons for this decision, including that the startup is not within the firm's focus or stage of desired investment. But assuming the company is within the investment parameters of the fund, here are 15 key determining factors for whether a venture firm will or will not decide to invest in a startup that is seeking venture capital.
1. Is There a Great Management Team?
Many investors consider the team behind a startup more important than the idea or the product. The investors will want to know that the team has the right set of skills, drive, experience, and temperament to grow the business. Anticipate these questions:
Ultimately, the investor will need to make a judgment about whether the founder and team will be enjoyable to work with. Does the investor believe in the team? Is the CEO experienced and willing to listen? Also, involving experienced advisors can be very helpful in the early stages to help bridge an early stage team that is still growing.
2. Is the Market Opportunity Big?
Most investors are looking for businesses that can scale and become meaningful, so make sure you address the issue right up front as to why your business has the potential to become really big. Don't present any small ideas. If the first product or service is small, then perhaps you need to position the company as a "platform" business allowing the creation of multiple products or apps. Investors will want to know the actual addressable market and what percentage of the market you plan to capture over time.
For most investors, a "big" market opportunity is in excess of $1 billion in sales annually.
3. What Positive Early Traction Has the Company Achieved?
One of the most important things for investors will be signs of any early traction or customers. A company that has obtained early traction will be more likely to obtain venture financing and with better terms. Examples of early traction can include the following:
Investors will want to know, How can the early traction be accelerated? What has been the principal reason for the traction? How can the company can scale this early traction?
Don't forget to show early buzz or press you have received, especially from prominent websites or publications. Feature the headlines in a slide on your investor pitch deck. List the number of articles and publications mentioning the company.
4. Are the Founders Passionate and Determined?
Many venture capitalists look for passionate and determined founders. Are they individuals who will be dedicated to growing the business and facing the inevitable challenges?
As Paul Martino, General Partner of Bullpen Capital, says:
"We have a saying at Bullpen that we like 'blue collar' CEOs. That means that we like to see nuts-and-bolts operators, not pie-in-the-sky dreamers. Demonstrate that you've spent time looking up our background and investment portfolio finding mutual interests. I like founders who (1) know their metrics cold; (2) have a clear idea of the business they're in; and (3) know how to grow it. What gets my attention is a hard-nosed, determined founder who, with a few operational pointers combined with a solid, already existing plan, can get to an even bigger outcome. That's the kind of ride I want to take."
Deepak Kamra, General Partner of Canaan Partners, makes a related point:
"Yes, you need to appear professional if you are going to be starting a serious business, but you need to show some passion and enthusiasm. Startups are hard, and they take a long time, and you will need to show that you have the inner drive to get through the highs and lows. This doesn't mean you have to jump up and down and wave your arms. Perhaps it's a story about what is driving you to get into your business, why it's personal, or why there is nothing else you would rather do than spend the next 5 to 10 years living and breathing this idea of yours."
5. Do the Founders Understand the Financials and Key Metrics of Their Business?
Venture capitalists look for founders who truly understand the financials and key metrics of their business. You need to show that you have a handle on all of those and are able to articulate them coherently.
Mark Patricof, founder of Patricof & Co., says:
"Know exactly what you want to spend your money on. Don't tell me how long it will last; tell me what you want to prove. The most impressive entrepreneurs communicate the value of their businesses through numbers. A conversation centered on a company's revenue growth, sales funnel, and customer churn causes an immediate connection with investors because when entrepreneurs position themselves as metrics-driven, it's as though they've entered an investor's mind."
Josh Stein, General Partner of DFJ Ventures, says:
"Know your KPIs (Key Performance Indicators). Effective entrepreneurs understand what their top priorities are and manage their companies by focusing their teams around a handful of critical metrics that reflect those priorities. I'm always interested when a founder can articulate her KPIs, talk intellectually about her team executing to improve them, and has a clear sense of where those metrics can be in a year or two."
6. Has the Entrepreneur Been Referred to Me by a Trusted Colleague?
Venture firms get inundated with unsolicited executive summaries and pitch decks. Most of the time, those solicitations are ignored. The way to capture the attention of a venture capitalist is to get a warm introduction from a trusted colleague: an entrepreneur, a lawyer, an investment banker, an angel investor, or another venture capitalist.
7. Is the Initial Investor Pitch Deck Professional and Interesting?
The first thing the venture investor will expect is to see a 15-20 page investor pitch deck before taking a meeting. From the pitch deck, the investor hopes to see an interesting business model with committed entrepreneurs and big opportunity. So make sure you have prepared and vetted a great pitch deck. Looking at other pitch decks and executive summaries can help you improve your own. See How to Create a Great Investor Pitch Deck for Startups Seeking Financing.
8. What Are the Potential Risks to the Business?
Investors want to understand what risks there might be to the business. They want to understand your thought process and the mitigating precautions you are taking to reduce those risks. There inevitably are risks in any business plan, so be prepared to answer these questions thoughtfully:
Startups that can show they have reduced or eliminated product, technology, sales, or market risks will have an advantage in fund-raising.
9. Why Is the Company's Product Great?
The entrepreneur must clearly articulate what the company's product or service consists of and why it is unique, so entrepreneurs should expect to get the following questions:
10. How Will My Investment Capital Be Used and What Progress Will Be Made With That Capital?
Investors will absolutely want to know how their capital will be invested and your proposed burn rate (so that they can understand when you may need the next round of financing). It will also allow the investors to test whether your fund-raising plans are reasonable given the capital requirements you will have. And it will allow the investors to see whether your estimate of costs (e.g., for engineering talent, for marketing costs, or office space) is reasonable given their experiences with other companies. Investors want to make sure at minimum that you have capital to meet your next milestone so you can raise more financing.
11. Is the Expected Valuation for the Company Realistic?
If you tell an investor you want a $100 million valuation even though you started the business three weeks ago, or don't have much traction yet, the conversation will likely end very quickly. Often, it's best not to discuss valuation in a first meeting other than to say you expect to be reasonable on valuation. But the venture investor also doesn't want to waste a lot of time on a deal if the valuation expectations are unreasonable or not attractive.
Valuation at an early stage of a technology company is more of an art than a science. To help bridge the valuation gap for early stage startups, you often see investors looking for a convertible instrument with customary conversion discounts and valuation caps. These instruments, such as convertible notes and "SAFEs," have become quite common. For more information about this, be sure to read A Guide to Venture Capital Financings for Startups.
12. Does the Company Have Differentiated Technology?
As most venture investors invest in software, internet, mobile, or other technology companies, an analysis of the startup's technology or proposed technology is critical. The questions the investors will pursue include:
13. What Is the Company's Intellectual Property?
For many companies, their intellectual property will be a key to success. Investors will pay particular attention to your answers to these questions:
14. Are the Company's Financial Projections Realistic and Interesting?
If you present investors with projections showing the company will achieve $5 million in revenue in five years, they will have little interest. Investors want to invest in a company that can grow significantly and become an exciting business. Alternatively, if you show projections in which the company predicts to be at $500 million in three years, the investors will just think you are unrealistic, especially if you are at zero in revenues today. Avoid assumptions in your projections that will be difficult to justify, such as how you will get to a 400% growth in revenue with only a 20% growth in operating and marketing costs.
In order to believe your financial projections, investors will want you to articulate the key assumptions you have and convince them those assumptions are reasonable. If you can't do that, then the investors won't feel you have a real handle on the business. Expect that investors will push back on the assumptions and they will want you to have a cogent, thoughtful response.
15. Is Your Legal Formation Clean and in Compliance with Applicable Laws?
Investors don't want to invest in a company that has legal issues with the founders or third parties, failed to properly issue stock or options, failed to make securities law filings, has unaccredited investors, or hasn't complied with employment laws—these are all red flags. Before pitching your business, you need to make sure the company is clean from a legal perspective. An experienced startup lawyer can help significantly. See 10 Big Legal Mistakes Made by Startups.
Copyright © by Richard D. Harroch. All Rights Reserved.
About the Authors
Richard D. Harroch is a Managing Director and Global Head of M&A at VantagePoint Capital Partners, a large venture capital fund in the San Francisco area. His focus is on Internet, digital media, and software companies, and he was the founder of several Internet companies. His articles have appeared online in Forbes, Fortune, MSN, Yahoo, FoxBusiness, and AllBusiness.com. Richard is the author of several books on startups and entrepreneurship as well as the co-author of Poker for Dummies and a Wall Street Journal-bestselling book on small business. He is the co-author of the recently published 1,500-page book by Bloomberg, Mergers and Acquisitions of Privately Held Companies: Analysis, Forms and Agreements. He was also a corporate and M&A partner at the law firm of Orrick, Herrington & Sutcliffe, with experience in startups, mergers and acquisitions, and venture capital. He has been involved in over 200 M&A transactions and 250 startup financings. He can be reached through LinkedIn.
Larry Kane is a corporate partner in the San Francisco office of Orrick, Herrington & Sutcliffe LLP. He represents newly formed and high-growth technology companies and venture and private equity investors. Larry's typical representations range from formation and early stage corporate counseling, angel and venture capital financing, mergers and acquisitions, joint ventures and partnerships to venture fund formation, lending and other commercial transactions. Larry's practice focuses on a range of technology companies spanning education technology, software and SaaS business, education server, consumer products, and semiconductor business. Larry can be reached through the Orrick.com site.
Posted: 13 Apr 2019 05:00 AM PDT
I sat down with Menlo Ventures partner Shawn Carolan this week to talk about his early investment in Uber. Menlo, if you remember, led Uber's Series B and has made a hefty sum over the year selling shares in the ride-hailing company. I'll have more on that later; for now, I want to share some of the insights Carolan had on his experience ditching venture capital to become a founder.
Around when Menlo made its first investment in Uber, Carolan began taking a step back from the firm and building Handle, a startup that built tools to help people be more productive. Despite years of hard work, Handle was ultimately a failure. Carolan said he shed a lot of tears over its demise, but used the experience to connect more intimately with founders and to offer them more candid, authentic advice.
"People in the valley are always achievement-oriented; it's always about the next thing and crushing it and whatever," Carolan told TechCrunch. "When [Handle] shut down, I had this spreadsheet of all the people who I felt like I disappointed: Seed investors who invested in me, all the people at Menlo and my friends who had tweeted out early stuff. It was a long spreadsheet of like 60 people. And when I started a sabbatical, what I said was I'm going to go connect with everyone and apologize."
Today, Carolan encourages founders to own their vulnerabilities.
"It's OK to admit when you're wrong," he said. "Now I can see it on [founders'] faces, I can see when they're scared. And they're not going to say they're scared but I know it's tough. This is one of the toughest things that you're going to go through. Now I can be there emotionally for these founders and I can say 'here's how you do it, here's how you talk to your team and here's what you share.' A lot of founders feel like they have to do this alone and that's why you have to get comfortable with your vulnerability."
After Handle shuttered, Carolan returned to Menlo full time and made the firm a boatload of money from Roku's IPO and now Uber's. Anyway, thought those were some nice anecdotes that should be shared since most of our feeds are dominated by Silicon Valley hustle porn.
Want more TechCrunch newsletters? Sign up here. Ok, on to other news…
There were so many fund announcements this week; here's a quick list.
Lots of great new exclusive content for our Extra Crunch subscribers is on the site, including this deep dive into the challenges of transportation startup profits. Plus: When to ditch a nightmare customer, before they kill your startup; The right way to do AI in security; and The definitive Niantic reading guide.
Sinema, that one MoviePass competitor, has run into its fair share of bumps in the road. TechCrunch's Brian Heater hopped on the phone with the startup's CEO this week to learn more about those bumps, why its terminating accounts en masse, a class-action lawsuit its battling and more.
TechCrunch's Startup Battlefield brings the world's top early-stage startups together on one stage to compete for non-dilutive prize money, and the attention of media and investors worldwide. Here's a quick update on some of our BF winners and finalists:
If you enjoy this newsletter, be sure to check out TechCrunch's venture-focused podcast, Equity. In this week's episode, available here, Crunchbase News editor-in-chief Alex Wilhelm, myself and Phil Libin, the founder of Evernote and AllTurtles, chat about the importance of IPOs. Plus, in a special Equity Shot, Alex and I unpack the Uber S-1.
Posted: 14 Apr 2019 06:30 AM PDT
Hydrogen has been a promising but elusive vehicle fuel for half a century, powering a range of fuel cell cars and SUVs but never quite solving cost and efficiency snags and lack of fuel stations that make it less attractive than batteries for zero-emission vehicles. The problem isn't the technology, argues the founder of Arizona startup Nikola Motor, but that big trucks are a much better choice for hydrogen.
The 4-year-old maker of hydrogen tractor trailers is extolling a vision as brash as the one Tesla's founders unveiled 13 years ago with its pricey all-electric cars: Nikola will act as a catalyst to bring hydrogen to the mainstream, building tens of thousands of hydrogen-powered big rigs and a coast-to-coast hydrogen station network to fuel them. It also wants carmakers like Toyota, General Motors, Honda, Hyundai and Daimler to use those stations to expand their hydrogen fuel cell vehicle sales beyond California.
It won't be cheap: Nikola is seeking $1.25 billion to fund it, on top of $300 million raised so far, CEO Trevor Milton tells Forbes. He'll make a big push this week with a Nikola-led hydrogen tech conference in Scottsdale, Arizona, convening suppliers, partners, potential investors, future customers and carmakers, to gin up excitement and win powerful allies.
"You can't do this alone. Toyota and the others can't do it on their own and neither could we," he said. "The thing that Nikola brings to the table is we actually provide the entire network, we're building 700 hydrogen stations around America. It will be the largest in the world."
Milton is pushing trucks because it's easier to package the bulky tanks that hold compressed hydrogen gas on big trucks than cars, the technology's costs are easier to recoup on heavily used commercial vehicles than cars and refueling time and driving range are comparable to diesel trucks. He'll be competing with several companies readying battery trucks including Tesla–which has signed up Pepsi, Anheuser Busch, FedEx, Walmart as customers–as well as Daimler, BYD and startup Thor. But he sees a big advantage for Nikola's hydrogen fuel cell system for long-distance highway runs of 500 miles or more: It's much lighter than Elon Musk's battery-powered Tesla Semi.
"Hydrogen works way better on heavy-duty (trucks), and we're 5,000 pounds lighter than Tesla," he said. "Look at Anheuser Busch. They ordered 40 or 50 trucks from them and 800 from us." In fact, he claims Nikola has lined up $14 billion in truck leases from big shippers including Anheuser Busch and U.S. Express, each of which is a seven-year lease is worth about $1 million.
"We're sold out for eight years of production," said Milton, who worked for steel and metals powerhouse Worthington Industries and sold low-emission fuel systems for heavy-duty vehicles for German engineering firm DHybrid before founding Nikola.
But none of those orders turn into revenue until Nikola completes its fundraising push and gets into production, targeted for late 2022. Its fueling network, with stand-alone stations dispensing hydrogen extracted from water, using electricity produced by wind, solar and other renewable sources, will take much of the 2020s to set up. The next three years will be tough and require nonstop spending by the unproven startup. But its success would benefit companies that have been plugging away in hydrogen for years, improving the odds of getting industry support Milton seeks.
Sales of electric cars are growing worldwide as batteries and component costs improve, led by Tesla, and increasing numbers of medium- and heavy-duty electric trucks and buses can be found on the streets of big cities and at ports. But the physics of long-range semis, hauling up to 80,000 pounds including the cab and trailer, mean the winning technology is still a wildcard.
"If you want to electrify heavy-duty trucks, a Class-8 truck needs seven tons or 700-kilowatt hours of battery in there, that makes four to five packs to store in the truck. By comparison, you get the same range from a few hundred kilograms of hydrogen," said Bernd Heid, a senior partner at McKinsey & Company, who researches trucking industry trends and technology.
Similarly, batteries require vastly more recharge time than either hydrogen or for conventional diesel fuel. With diesel, every minute of fueling provides 20 miles of range for a big truck, while with hydrogen, a minute of fueling provides 12 miles of range, Heid calculates. For a battery-powered truck, each minute of charging only provides 3 miles, he said. So for a truck to go 500 miles, it takes about 25 minutes for a diesel, 42 minutes for hydrogen and potentially more than two and a half hours for a battery truck. (Musk has said Tesla will have a network of "Megachargers" that provide 400 miles range in 30 minutes for its futuristic Semi, with its battery packs plugged into individual chargers to simultaneously repower them.)
"Trucking is a business that is ideally operating 24-seven," Heid said. "Every minute or hour that you have downtime not operating, it doesn't make money. The filling or charging time is a huge business impact."
Fuel cell and battery-powered vehicles are both electric, sharing the same motors and many other components. The key difference is that batteries store electricity and fuel cells produce it onboard as needed, in an electrochemical process that extracts electrons from hydrogen forced through fuel cell membranes. Aside from the electricity, the only byproduct is water vapor, rather than harmful diesel exhaust. Beyond cars and trucks, they've been used by NASA for decades, they work as stationary electricity generators and are being developed to power trains and even ships and ferries.
For battery cars, it's relatively simple to create public charging infrastructure to allow drivers to power up when parked, but even a fast charge can take 30 minutes or more. Fuel cell cars can be refueled in about the same amount of time as those using gasoline, though the number of public stations dispensing compressed hydrogen gas in California, which has the most, is just 37 currently, clustered in the Bay Area, Los Angeles and Orange County and down to San Diego. Dozens more are planned, but like the extensive Supercharger network Musk has built up for Tesla owners, Nikola's 700-station goal would be a game-changer for cross-country travel.
"If there's suddenly this expansion of hydrogen infrastructure across the U.S., it's a big deal," said Craig Scott, national manager for Toyota's U.S. advanced technologies group. "It would be a very good thing to have more hydrogen stations opening up–more is more."
Toyota has sold Mirai hydrogen sedans in California and Japan for the past few years, and operates two fuel cell trucks at the Ports of Los Angeles and Long Beach, with more on the way. It's even building a hydrogen plant at the ports, making the fuel from waste material, to power its fleet.
Milton will elaborate this week on a strategy that will take the better part of a decade to realize. It includes prepping a 500-acre site for its plant outside of Phoenix, with plans to break ground early next year. It's designed to eventually crank out up to 50,000 semi-trucks a year, a massive amount of production capacity in the world of big rigs. Nikola has also unveiled three different models, including the long-range Nikola One, with a sleeper cab, the Nikola Two for shorter uses, and the Nikola Tre, which will be offered with a choice of hydrogen system or batteries for shorter-range hauling.
"About 90% of all the orders that come in are coming in hydrogen, the other 10% are for electric," Milton said. "The nice thing about Nikola is we're the only company that can say, yeah, we offer both and we'll shoot it to you straight–based on your needs."
(Separately, Nikola filed suit against Tesla in federal court in Arizona last year claiming the design for its Semi unveiled in November 2017 was far too close to the Nikola One, which had its public debut more than a year earlier. Tesla tried to have the suit dismissed, but the litigation continues and may not be resolved until 2020.)
There's no question that Nikola's aspirations may exceed its abilities, but it will take years to know for sure.
In 2006, when Musk and Tesla's original management team laid out a quixotic vision to transform the auto industry with a new generation of electric cars, few at the company's public debut in Santa Monica, California, thought success was in the cards. Thirteen years later Musk's mission isn't complete but Tesla has achieved far more than expected and pushed auto rivals to go electric.
If Milton achieves half as much for hydrogen, while automakers keep building up their fuel cell offerings as hydrogen finds its way into new applications, the impact would be dramatic.
Nikola's Design Infringement Suit Against Tesla
Posted: 13 Apr 2019 12:54 PM PDT
[Editor's note: this is a free example of a series of articles we're publishing by top experts who have cutting-edge startup advice to offer, over on Extra Crunch. Get in touch at email@example.com if you have ideas to share.]
Even the best growth marketers fail to get content marketing to work. Many are unwittingly using tactics from 4 years ago that no longer work today.
This post cuts through the noise by sharing real-world data behind some of the biggest SEO successes this year.
It studies the content marketing performance of clients with Growth Machine and Bell Curve (my company) — two marketing agencies who have helped grow Perfect Keto, Tovala, Framer, Crowd Cow, Imperfect Produce, and over a hundred others.
What content do their clients write about, how do they optimize that content to rank well (SEO), and how do they convert their readers into customers?
You're about to see how most startups manage their blogs the wrong way.
In the past, Google wasn't skilled at identifying and promoting high quality articles. Their algorithms were tricked by low-value, "content farm" posts.
That is no longer the case.
Today, Google is getting close to delivering on its original mission statement: "To organize the world's information and make it universally accessible and useful." In other words, they now reliably identify high quality articles. How? By monitoring engagement signals: Google can detect when a visitor hits the Back button in their browser. This signals that the reader quickly bounced from the article after they clicked to read it.
If this occurs frequently for an article, Google ranks that article lower. It deems it low quality.
For example, below is a screenshot of the (old) Google Webmaster Tools interface. It visualizes this quality assessment process: It shows a blog post with the potential to rank for the keyword "design packaging ideas." Google initially ranked it at position 25.
However, since readers weren't engaging with the content as time went on, Google incrementally ranked the article lower — until it completely fell off the results page:
The lesson? Your objective is to write high quality articles that keep readers engaged. Almost everything else is noise.
In studying our clients, we've identified four rules for writing engaging posts.
1. Write articles for queries that actually prioritize articles.
Not all search queries are best served by articles.
Below, examine the results for "personalized skincare:"
Notice that Google is prioritizing quizzes. Not articles.
So if you don't perform a check like this before writing an article on "personalized skincare," there's a good chance you're wasting your time. Because, for some queries, Google has begun prioritizing local recommendations, videos, quizzes, or other types of results that aren't articles.
Sanity check this before you sit down to write.
2. Write titles that accurately depict what readers get from the content.
Are incoming readers looking to buy a product? Then be sure to show them product links.
Or, were they looking for a recipe? Provide that.
Make your content deliver on what your titles imply a reader will see. Otherwise, readers bounce. Google will then notice the accumulating bounces, and you'll be penalized.
3. Write articles that conclude the searcher's experience.
Your objective is to be the last site a visitor visits in their search journey.
Meaning, if they read your post then don't look at other Google result, Google infers that your post gave the searcher what they were looking for. And that's Google's prime directive: get searchers to their destination through the shortest path possible.
The two-part trick for concluding the searcher's journey is to:
Go sufficiently in-depth to cover all the subtopics they could be looking for.
Link to related posts that may cover the tangential topics they seek.
This is what we use Clearscope for — it ensures we don't miss critical subtopics that help our posts rank:
4. Write in-depth yet concise content.
In 2019, what do most of the top-ranked blogs have in common?
They skip filler introductions, keep their paragraphs short, and get to the point.
And, to make navigation seamless, they employ a "table of contents" experience:
Be like them, and get out of the reader's way. All our best-performing blogs do this.
Check out more articles by Julian Shapiro over on Extra Crunch, including "What's the cost of buying users from Facebook and 13 other ad networks?" and "Which types of startups are most often profitable?"
In going through our data, the second major learning was about "backlinks", which is marketing jargon for a link to your site from someone else's.
Four years ago, the SEO community was focused on backlinks and Domain Ranking (DR) — an indication of how many quality sites link to yours (scored from 0 to 100). At the time, they were right to be concerned about backlinks.
Today, our data reveals that backlinks don't matter as much as they used to. They certainly help, but you need great content behind them.
Most content marketers haven't caught up to this.
Here's a screenshot showing how small publishers can beat out large behemoths today — with very little Domain Ranking:
The implication is that, even without backlinks, Google is still happy to rank you highly. Consider this: They don't need your site to be linked from TechCrunch for their algorithm to determine whether visitors are engaged on your site.
Remember: Google has Google Analytics, Google Search, Google Ads, and Google Chrome data to monitor how searchers engage with your site. Believe me, if they want to find out whether your content is engaging, they can find a way. They don't need backlinks to tell them.
This is not to say that backlinks are useless.
Our data shows they still provide value, just much less. Notably, they get your pages "considered" by Google sooner: If you have backlinks from authoritative and relevant sites, Google will have the confidence to send test traffic to your pages in perhaps a few weeks instead of in a few months.
Here's what I mean by "test traffic:" In the weeks after publishing your post, Google notices them then experimentally surfaces them at the top of related search terms. They then monitor whether searchers engage with the content (i.e. don't quickly hit their Back button). If the engagement is engaging, they'll increasingly surface your articles. And increase your rankings over time.
Having good backlinks can cut this process down from months to a few weeks.
Engagement isn't your end goal. It's the precursor to what ultimately matters: getting a signup, subscribe, or purchase. (Marketers call this your "conversion event.") Visitors can take a few paths to your conversion event:
Short: They read the initial post then immediately convert.
Medium: They read the initial post plus a few more before eventually converting.
Long (most common): They subscribe to your newsletter and/or return later.
To increase the ratio at which readers take the short and medium paths, optimize your blog posts' copy, design, and calls to action. We've identified two rules for doing this.
1. Naturally segue to your pitch
Our data shows you should not pitch your product until the back half of your post.
Why? Pitching yourself in the intro can taint the authenticity of your article.
Also, the further a reader gets into a good article, the more familiarity and trust they'll accrue for your brand, which means they're less likely to ignore your pitch once they encounter it.
2. Don't make your pitch look like an ad
Most blogs make their product pitches look like big, show-stopping banner ads.
Our data shows this visual fanfare is reflexively ignored by readers.
Instead, plug your product using a normal text link — styled no differently than any other link in your post. Woodpath, a health blog with Amazon products to pitch, does this well.
Finally, our best-performing clients focus less on their Google Analytics data and more on their readers' full journeys: They encourage readers to provide their email so they can follow up with a series of "drip" emails. Ideally, these build trust in the brand and get visitors to eventually convert.
They "retarget" readers with ads. This entails pitching them with ads for the products that are most relevant to the topics they read on the blog. (Facebook and Instagram provide the granular control necessary to segment traffic like this.) You can read my growth marketing handbook to learn more about running retargeting ads well.
Here's why retargeting is high-leverage: In running Facebook and Instagram ads for over a hundred startups, we've found that the cost of a retargeting purchase is one third the cost of a purchase from ads shown to people who haven't yet been to our site.
Our data shows that clients who earn nothing from their blog traffic can sometimes earn thousands by simply retargeting ads to their readers.
It's possible for a blog with 50,000 monthly visitors to earn nothing.
So, prioritize visitor engagement over volume: Make your hero metrics your revenue per visitor and your total revenue. That'll keep your eye on the intermediary goals that matter: Attracting visitors with an intent to convert
Keeping those visitors engaged on the site
Then compelling them to convert
In short, your goal is to help Google do its job: Get readers where they need to go with the least amount of friction in their way.
Be sure to check out more articles from Julian Shapiro over on Extra Crunch, and get in touch with the Extra Crunch editors if you have cutting-edge startup advice to share with our subscribers, at firstname.lastname@example.org.
Posted: 14 Apr 2019 10:39 AM PDT
From decoding India's newest obsession to a start-up getting the backing of the Gates, here's all you need to know
2 min read
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.Today ends an exciting week for the Indian start-up community, it's time to find out what all you missed?
Online Gaming: India's New Obsession
The online gaming industry has changed the landscape of the gaming market in India. This week saw India getting its third unicorn and a first in the online gaming sector. Dream11 joined the Indian billion-dollar valuation club with an investment from Steadview Capital. The sector is hot not just for funding but also for other start-ups. After Paytm, Bengaluru-based start-up PhonePe has partnered with online gaming platform Mobile Premier League(MPL). start-ups are foraying into the gaming space because they see the potential.
Mergers, Acquisitions and Partnership
In the acquisitions that happened this week, technology once again grabbed eyeballs. AI Chatbot Company Quinto.ai was acquired by Netcore Solutions through smart deal-making platform, Propeluss. Another start-up gets the backing of the Gates. Healthtech startup Niramai is developing an AI-based computer-aided software for controlling the spread of a tropical skin disease, with the support of the Bill and Melinda Gates Foundation.
When the "Shark" Comes to India
Image credit: Entrepreneur India
The original shark is in India. American entrepreneur and reality TV show Shark Tank's investor Kevin Harrington invested an undisclosed amount in Delhi-based retail start-up The New Shop. The New Shop, owned by ProductX Ventures announced their strategic partnership with Harrington. This is Harrington's first investment in the Indian market which, according to him, is a "consumer market he has never been able to conquer."
From the funding desk, here are the start-ups that raised funding this week.
Bengaluru-based, consumer loans marketplace Credy raised an undisclosed amount in a Pre-Series A.
Bengaluru-headquartered epharmacy startup, Medlife, raised INR $17 Mn in an equity funding round.
Bengaluru-based financial services startup Setu raised $3.5 Mn in a seed funding round.
One of the biggest rounds of funding was raised by Mumbai-based WizRocket. it raised $26 Mn from Sequoia Capital and Tiger Global Management.
Bengaluru-based social commerce platform GlowRoad raised $10 Mn in a Series B round of funding.
SigTuple raised $16 Mn in its Series C funding round. Binny Bansal, one of the investors will join the board as part of the deal.
Bengaluru-based payment gateway startup Cashfree raised $5.5 Mn.
A starup that provides software development tools, Kuliza, raised $3 Mn.
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