We wanted to share with you some great insights from the folks at Salesforce on what it takes to build a successful enterprise app company. We work with many Salesforce ISVs as well as other enterprise app companies and these 8 principles match closely to paths traveled by the most successful companies we’ve funded. Not to steal their thunder—because you should definitely take the 10 minutes to look through the e-book—but here’s how some of the key insights from Salesforce relate to raising capital.
Getting the product-market fit right is crucial. Your ability to explain the market opportunity, the problem your product is going to solve, and how your product is going to solve it is what will get investors excited—and get you the funds you need to grow your business.
Don’t compromise your product for the sake of one customer, no matter how big. It will only limit your market appeal. From a funding point of view, investors like to see some diversity in the customer base. Early on, it’s not unusual to have a concentration of customers, particularly with enterprise apps, but you need to be able to show that your product has broad appeal beyond your existing customer base.
You need the best developers to make sure you have the best product, but you also need a great sales, servicing, and marketing engine to drive and sustain your growth. Investors want to know that your team has the chops to not only deliver a great product, but get it into the hands of customers.
A great distribution strategy is key. It’s why Lighter Capital likes funding companies on ecosystems like Salesforce—they have a ready primed, addressable market. 63% of Salesforce customers use at least one AppExchange app, and 23% use more than five. That’s a pretty good distribution starting point.
One addition to help you fundraise
We’d like to add one principle: set a plan for how you intend to raise capital to grow your business.
Making the right funding choices when you are starting to grow can greatly affect the future trajectory of your business, the amount of control you will have and, ultimately, the total value you will extract from it. We recently wrote a piece for VentureBeat, “The 6 most important questions to ask about raising capital for your startup” to help entrepreneurs understand the decision process.
There are plenty of options for funding. Make sure you pick the ones that suit your long-term business goals and that you understand the impacts—both positive and negative.
Think VC isn’t all it’s cracked up to be?
This guide explains what your financing options are, outlining five alternative financing methods for getting your startup off the ground.