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Startups often work A defect in the creation and development of the product. But companies are designed to make money, and over time as unit economics and customer acquisition costs improve, you’ll probably be in the blue. Maybe. Hopefully.
At least, that’s what your investors are playing for. So that means your business model slide needs to paint a picture of where you are now and how the business will grow over time.
This example was a business model slide I used for my book “Pitch Perfect”. You can see the full template here. Image Credits: Haje camps
In theory, your “business model” could encompass all of your business; The Business Model Canvas is one way to test that, and you can easily spend an hour talking about a comprehensive end-to-end business model. For funding purposes, however, you probably only need a few key elements:
- COGS, Or cost of goods sold, is the incremental cost of each unit you supply. For software, this typically boils down to zero, but for hardware products or more service-driven businesses, the unit cost can be high.
- CAC, Or customer acquisition cost, sales and marketing cost is how many customers are signed up.
- LTV, Or Lifetime Value: How much is each customer worth on average once they sign up?
- R&D expenditure It is the cost of producing the product. This is usually not factored into the business model, but if R&D costs are astronomical and the bottom line is never met, you may have a problem that needs to be explored.
- Pricing model It’s not usually part of its own business model (it falls under LTV), but if you’re doing something unusual or innovative with your pricing, it’s worth including it here or on your go-to-market slide.
Breaking down those numbers and presenting them in the right way can greatly benefit how you tell your startup’s story to investors.
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