Fundraising in 2020? → Match your Narrative with Numbers!

6 min readNov 18, 2019

The soon ending 2019 has become a watershed year for the venture ecosystem. Several long-expected IPOs finally happened — or they didn’t, as in the case of now infamous WeWork.

What WeWork has shown: No amount of funding will be enough to turn a startup with a fundamentally flawed model into a successful public company.

Public markets generally accept fast-growing but loss-making tech companies. Nevertheless, they want to see a clear path to profitability and unit economics that make sense. Looking at the current stock charts of companies such as Uber, Lyft, Slack, and Peloton, that message has been delivered loud and clear.

The ripple effects have made their way to the Late stages of the startup ecosystem, and from there are trickling down. We are seeing a shift away from investing based on momentum, growth-at-all-costs and “betting on the greater fool” back to fundamentals:

In 2020, investors at all levels of the venture stack will look for companies with compelling and plausible narratives, backed up by the numbers.

In the following article, I will outline how to build such a narrative and give examples for the right quantitative proof points to back up the narrative. If you build your equity story accordingly, you maximize your chances for a successful fundraise — even in a likely more challenging environment in 2020.

Three underused core elements of a startup equity story

The narrative and numbers that you will need to deliver is highly dependent on your stage. They will be vastly different from Seed to Series C+.

Further below I am outlining them — each for Seed, Series A, B, and C+ fundraises.

But before, I would like to introduce three core elements that — irrespective of stage — always should be part of your equity story:

The Story Hook
The Magic Milestone
The Culture Advantage

The Story Hook talks about a big, relevant change that is happening in the world. Change attracts attention like nothing else. Therefore, the Story Hook needs to be literally the first slide after the cover page in your pitch deck.

The change could be anything from a rapidly emerging platform enabling new business models, social trends, new regulations, to changing consumer attitudes. It must be a big change and it must be evident that it creates a big opportunity for you.

Show that you have the wind at your back and quantify how strong that wind is blowing.

Have a look at how digital pet insurer Bought By Many (CommerzVentures portfolio) quantifies the “Humanisation of Pets” trend. Putting numbers behind the story makes their point so much stronger!

The next slide in your pitch deck should talk about the Magic Milestone that you will achieve through this funding round, ahead of the next round. Magic Milestones could be:

achieving market leadership in a certain customer segment or geography
adding a digit to your customer number (eg. going from 10k to 100k customers)
reaching a revenue number that will make your company attractive for strategic acquirers in your market

The Magic Milestone tells investors what exactly they will get for their investment — which is way more compelling than the typical use of funds statement (“50% for team, 30% for marketing, 20% for product”, etc.).

Together with the Story Hook, it tells your prospective investors not only how strong the wind is blowing, but how far the wind will carry you if you were to attach wings (ie. deploy their funding).

The purpose of these two core elements is to get attention and spark the imagination of investors. Once that is achieved, they will view your company through a positive frame and be excited to learn more.

It is your job then to show that you are able to operate the wings and how you will make sure to stay on track towards the Magic Milestone.

In that context, I would like to introduce a fundraising superpower that is still very much underused — and that I hope more startups will I apply in 2020:

The Culture Advantage

Explicit values and a strong culture are key ingredients for successfully scaling an organization.

Internally, they are guiding teams to the behaviors needed for the company to be successful. They also define how information flows between teams and their members and how decisions are made — from determining overall strategy down to the hundreds of small operational decisions that individual team members make every day.

Externally, they help attracting strong talent and build your company brand.

Berlin-based AI-startup omni:us serves as a great example. With its distinct culture, it has been able to attract highly sought-after AI experts from around the world. In fact, its team of 75 specialists hail from more than 30 countries. Given the diversity of the team, its culture also serves as a frame of reference and a powerful retention tool.

Quantifying something as “soft” as culture is of course not straightforward. You should let your investors experience it.

In addition, the following data points may help to convey the effectiveness of your culture:

Employee engagement benchmarking (eg. through platforms such as Peakon or Culture Amp)
Yield rate of your job offers, ie. the share of prospective employees who have accepted your offers
Profiles of star employees you were able to attract
Rate of employee turnover
Employer Ratings on sites such as Glassdoor or Kununu

At the Seed stage and in an early Series A, some of these data points may not be available yet, due to the small size of your team. However, the quality of your team will be a key part of your narrative.

How to match Narrative and Numbers at your Stage of the Fundraising cycle

In the following I will outline the core elements of a narrative and the supporting numbers/ proof points for each stage in the fundraising lifecycle.