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- ♞ AARRR Framework
How can this help you explain your business to VCs
As I’ve been working with more companies, I’ve been trying to find common frameworks that some are familiar with to help them learn how to pitch their company to VCs. What I find helpful with these frameworks is that they give you a structure within which to understand your own company and to help investors understand it.
Today I want to discuss the AARRR Framework. This framework, is as follows:
Acquisition - How do you find customers?
Activation - How do you get them to the “Aha-Moment” where they see your value?
Retention - Do you keep them?
Referral - How/Do you turn customers into advocates?
Revenue - How do you make money
This framework is very simply but for seed stage companies, I feel it does a great job of helping you narrow in on the specific questions that investors have. So let’s dive in a little deeper.
Acquisition - If you are a pre-seed company, share where you currently find customers. If you are a seed/Series A company, you should have evidence that you have a customer funnel that can be exploited with more resources. In short, you need to demonstrate that for every $1 invested in the funnel, you will receive a return of $ 1 or more.
Activation - The ability to get customers to the “aha-moment” is often overlooked by startups. When you are trying to take on incumbents, the faster/cheaper you can do this, the better. Ideal customers can reach this moment with the fewest barriers, allowing them to experience your value quickly. ChatGPT’s virality was because anyone could go on and get that “aha-moment” within seconds for free. You need to think of that flow and try to replicate it as closely as possible.
Retention - Investors will want to know if you can retain the customers you acquire after they have completed the activation. If you can, then you have a long-term business; if you can’t, then you have a cool product that you can share as a hobby.
Referral - Taking retention a step further, can you get them to recommend your product to others? Apple was great at turning retained customers into advocates by building a lifestyle around their products, and Dropbox did it with a great free offering. Numerous strategies can work here; you need to find yours.
Revenue - It’s not a business if you can’t make money. Explain to investors where the money comes from!
Have you previously used this framework? |
Are you looking to grow your business? Here is how I can help:
📱 Book a Strategy Call to get 1:1 feedback on your pitch, pitch deck and/or fundraising strategy. (If you need general startup advice, then reply to this email, and I’ll let you know if/how I can help.)
Onwards and Upwards,
