Is there a risk with regard to the unit economics—that is, an inability to produce and market each unit of the device or service for less than it costs? Is there a risk of being unable to acquire new customers for less than a specific proportion of the sales price? Or a risk that “freemium” users may never convert to paid users?
Rather than working on ten different goals and achieving partial success in each, startups should think about their risk layers and try to focus all their efforts, including raising money, toward fully eliminating one or two risk layers with each round of financing.
“Say I raised a seed round, I achieved these milestones, I eliminated these risks,” Marc Andreessen said, offering advice about how to pitch a VC firm. Then, “I raised the A round. I achieved these milestones; I eliminated these risks. Now I am raising a B round. Here are my milestones, here are my risks, and by the time I go to raise a C round, here is the state I will be in.”
This way you can calculate and justify the amount of money you raise and create tangible goals around the use of funds.