What’s your entry strategy?

Investors are fond of asking entrepreneurs about exit strategy. After all, Investors get in in order to get out or exit. And these days the predominant exit is to be bought by another company. So, getting a sense of who would buy you and why is a logical part of the investment decision.

Prolific angel Ron Conway says he won’t do a deal unless he can think of 10 potential buyers for that startup in the future. That’s how important exit strategy is.

But long before we can talk about exit strategy as anything other than some far of dream, we need to focus all our attention on market entry.

What is your entry strategy?

How will you acquire users?
How will you, in a cost effective way, build awareness and engagement in a crowded online World?
If you distribute on an app store, how will you drive sustained acquisition rather than a short burst of interest?
What channels will you use for acquisition?
What role does PR play? How will you get it? Why will people write about you?
What 1st user segments are you targeting? Why? How will you reach them? What benefit do you provide to them?
How much does it cost to acquire a user?
What churn rate should you expect? What separates good from poor engagement?

These are a small list of the things that need to be thought through in detail if you are building an entry strategy and setting informed targets for users and revenue.

So often in investor pitches, I see founders do a great job of explaining their backgrounds, vision and offering. But almost universally, the discussions lack granularity on how the company will build it’s user and revenue base.

In my World of predominantly web and mobile web startups, traction is a prerequisite to securing any meaningful funding. So, going deep on how you will get that traction is mission critical.  Every startup I see on Angelist has traction or what they call “social proof”.

So next time an Investor asks you about exit strategy, have an answer, but focus the discussion back on near term milestones and show that you know how to build a user base. It will go a LONG way towards getting funded.