✅ Your Startup Efficiency Checklist
Founders Factory Startup Bulletin #30
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While a growth at all costs mentality might have once piqued the interest of venture capitalists, 2023’s investors are much more interested in seeing your path to profitability.
But that’s not to say that growth isn’t still important—quite the opposite. Ambition and exponential growth are still the order of the day when it comes to building venture backable startups. So how can you achieve this while also being cost efficient and profitable?
In today’s Startup Bulletin, Founders Factory’s Head of Growth Liam Nolan shares his checklist for startup efficiency—a brief guide to help you start implementing the right processes, frameworks, and tools to cut costs and get the most value out of your customers.
Also in today’s Startup Bulletin:
An exciting opportunity in ClimateTech
Our top recommended reads
Highlights from the FF portfolio this month
Jobs in our ecosystem
🌍 Before we start—an exciting ClimateTech opportunity
In 2021, we launched G-Force, a Climate Seed Programme to back the brightest founders solving the world’s biggest climate related challenges. You can read all about the story of Fund I here.
Fund II is officially live—and we are offering eligible investors the opportunity to partner with visionary founders, learn about the issues impacting our planet, and contribute to the development of impactful new technologies. Find out more on Seedrs below.
✅ Your Startup Efficiency Checklist
By Liam Nolan, Head of Growth at Founders Factory
1. Perfect your customer targeting
Truly knowing your customer has never been more important. The less well you understand your target audience, the broader your product will be—and no matter how good your creative is, you’re wasting money.
Getting to know your customer really fits into two buckets:
Quantitative—desk research, test ad campaigns, SEO and keyword research
Qualitative—getting out into the wild, speaking to people, understanding their pain points
2. Increasing value is as important as cutting costs
With efficiency, founders too quickly focus on cutting costs. But there’s a reason why people talk about Lifetime Value (LTV) alongside Customer Acquisition Costs (CAC)—the value side of the equation is just as important.
Improving customer value comes down to product market fit. Is your product/service solving a real problem and is it 10x better than the alternative? If it is, you can be confident in charging a higher price, more often, and for a longer period of time.
3. Pin down the metrics that are most important to you
If you really want to understand how efficient you are, tracking and analysis is pivotal. But unless you know what you want to track, you’re wasting time and effort.
LTV:CAC ratio is the metric all other KPIs should feed into. If your average customer yields more than you paid for them, you’ve got a viable business.
Understanding how each metric impacts LTV or CAC is important—including average order value (AOV), conversion and churn rates, and cost of traffic.
You may have heard people talk about avoiding vanity metrics. These are essentially metrics that you can’t confidently attribute to impacting either CAC or LTV.
4. Consider how you are attributing success
Now, nailing down your metrics is the first step—understanding how to track them and attribute success is the next, more complex step. The iOS14 update and the ‘cookie apocalypse’ has made this much harder—but even before this, startups struggled to see the full picture.
There are third party attribution tools, like Triple Whale, that can really help here; as can uplift tests (to predict how each customer is likely to respond to a marketing action and post-conversion surveys).
5. Prioritise processes objectively
There’s a simple framework for assessing the best levers and processes to prioritise—the ICE framework:
I for Impact—how big is the potential impact of this on KPIs?
C for Confidence—how certain are you that it’s going to work?
E for Effort—how much effort is required to get this to work?
For each, rate out of 10 and give it an accumulated score of 30. That will help you to know the most efficient ways to move forward.
6. Automate, automate, automate
It would be foolish not to mention the hundreds of tools at your fingertips to help you automate and accelerate processes across all stages of the growth funnel. New products in AI are being launched on a daily basis, so keep an eye open for tools that can really help you step up your output.
Here’s a glance at some of the tools we use at various stages in the funnel.
Read Liam’s full guide to Efficient Growth on the FF blog
📚 What we’ve been reading
Automating Creativity (One Useful Thing)—is generative AI capable of coming up with good venture ideas?
Requests for Builders: Startups I Would Build Today (Coinbase)—CEO Brian Armstrong shares his top 10 ideas for crypto products and services
The great unsubscribe: What’s next for subscriptions and recurring revenue? (Sifted)
I, Exponential (Not Boring)—Packy McCormick’s macro view on progress and exponential growth in tech
🚀 News from the Founders Factory portfolio
Founders Factory Africa announced $114m in funding from the Mastercard Foundation and Johnson & Johnson Impact Ventures. This new funding will help them extend their reach across Africa, invest in new sectors, and offer additional non-dilutive funding to startups
Matter announced a $10m Series A round led by S2G Ventures, the direct investment team for Builders Vision, and SOUNDWaves. The startup, founded by Adam Root, pioneers solutions for capturing, harvesting, and recycling microplastics
We announced our second investment with Blue Action Accelerator—Jeevan, a new direct air capture technology
We kicked off the Children’s Health Impact Accelerator, our 10-week programme backing founders in paediatric innovation. Learn more about the startups in our first cohort here
Dovetail co-founder Amos Wittenberg featured on the Startup Blueprint podcast, speaking about investing in net zero and how his startup is empowering the financial industry to do so
Opportunities in tech
💼 Jobs
Studio Lead, Founders Factory Italy (Milan/Hybrid)—join our FF Italy team and work alongside our early stage Venture Studio founders
Entrepreneur in Residence, Project Fete (London/Europe)—a chance to lead the build of our latest Venture Studio business in partnership with Pico. Fete is a decentralised community-first event platform
See you next month 👋
Interested in reading more of the same insights? Check out the Founders Factory blog, and previous newsletters.
Thanks for the elusive automation tools you are using! Experimenting and finding the right stack is where I’ve spent most of my time.
FF updates are very exciting. Especially Fete 👀