pre-pmf frameworks
here are some thoughts i'm collecting on best practices / things to look for in "pre-pmf" startups.
there are lots of "frameworks" that investors use to analyze post-traction / series a companies. you have all kinds of metrics to look at (good / better / best ranges for ltv to cac, triple triple double double double for growth, cohort retention is a great one for consumer-facing companies, etc)
at afore, we're a pre-seed-focused vc fund, and are looking to back founders at the earliest stages (pre-product or early traction is our bread and butter - we'll never say "too early"). oftentimes we're looking at companies before they have any kind of traction at all.
below is a working list i'll try to update frequently with good strategies and frameworks for analyzing and growing as a pre-pmf company. note - this is NOT prescriptive advice; it's generic, and so won't apply to every startup, but hopefully there will be some bullets in here that might be useful.
good operating principles for pre-pmf companies:
- marry the market, date the product: it's better to fall in love with a problem or market and be willing to nimbly iterate around the space, than to fall in love with an end product. there are some times where dev tools / consumer internet founders are able to be opinionated about a product without consulting users to get feedback, but these are edge cases rather than the norm
- sell before you build: most of the time you don't have to wait for the product to be perfect before showing it to people. test the waters, pre-sell the product, and use a sales deck as an iteration tool
- payment is the ultimate validation: way better than people telling you they like your idea (they could be trying to be nice - very few people will tell you your baby is ugly). see if you can get people to pay some amount (even if small), maybe by offering early access at a price
- shorten your iteration cycles: in some industries like fintech, healthcare, or highly-regulated spaces this will be tougher as you'll be waiting on certifications / partner institutions. but it's still a good idea to try to move quicker than your counterparts. and in other industries, if you're able to ship quickly, get feedback from users, and iterate rapidly, you'll have an edge
what pre-seed investors may be looking for:
- unique insight: some kind of unique angle you have that makes you stand out from other people building in your space (oftentimes this comes from being in the industry and seeing the problem first-hand). maybe everyone else is building their products one way, but you've found a killer feature that will help you succeed. or you have an interesting approach to go-to-market that will let you dominate. or there's some tailwind you see that others don't (regulatory-wise, a tech inflection point, etc)
- clarity of thought / succinctness: when you know a lot about a topic you're often able to describe it succinctly and in a simple way. try to start with your one-liner, then lead into your pitch with the insight, then give a few more details and wait for questions to come. you'll likely have to dumb down whatever you're working on so that industry outsiders (vc's) can understand it.
- fast learning cycles: again, certain industries are harder to "move fast" in (for good reasons), but it's oftentimes clear to vc's when you have a bias towards action / are high agency / move as quickly as you can. it helps a lot at the pre-pmf stage when you're able to validate and invalidate multiple ideas quickly
will add more to this later!