Explore

Pre-seed Memo

Key Milestones to Hit with Funding

Product:

Full SDK suite (iOS, Android, React Native)

Self-serve platform that enables users to sign up and implement a referral program without founder support

Key integrations (RevenueCat, mParticle, etc.)

Business:

30+ paying customers

$450K ARR run rate

85%+ gross margins

Clear path to $1M ARR

Funding Ask

$1M USD

Model

Revenue Model - Base Plan: $500/month - Growth Plan: $2,000/month - Enterprise Plan: $4,000+/month - Average Contract Value (ACV): $1,500/month initially - Customer distribution: 60% Base, 30% Growth, 10% Enterprise

Growth Metrics - Starting: 2 beta customers (Q4 2024) - Target: 30 paying customers by EOY 2025 - Sales cycle: 45 days - Gross margin: 85% (primarily hosting/infrastructure costs) - Monthly logo churn: 2.5% - Net revenue retention: 110% (expansion through usage growth)

Expenses

#### Personnel (Monthly Fully-Loaded Cost) - Engineering: $12,000 - Product/Growth: $10,000 - Sales/CS: $8,000 - Benefits/Perks: 20% of base

#### Other Operating Expenses - Cloud Infrastructure: $2,000/month base + $200/customer - Tools & Software: $1,000/month - Marketing: $5,000/month - Travel & Events: $2,000/month - Office & Misc: $1,000/month

## 18-Month Financial Projections

### Revenue ``` Q1 2025: $12,000 Q2 2025: $36,000 Q3 2025: $90,000 Q4 2025: $180,000 Q1 2026: $300,000 Q2 2026: $450,000 ```

### Expenses ``` Q1 2025: $180,000 Q2 2025: $210,000 Q3 2025: $240,000 Q4 2025: $300,000 Q1 2026: $360,000 Q2 2026: $420,000 ```

### Cash Burn ``` Q1 2025: -$168,000 Q2 2025: -$174,000 Q3 2025: -$150,000 Q4 2025: -$120,000 Q1 2026: -$60,000 Q2 2026: +$30,000 ```

Total 18-month burn: ~$642,000

## Fundraising Recommendation

### Amount to Raise: $1,000,000

Rationale: 1. Provides 18 months of runway with buffer 2. Allows hiring key roles while maintaining founder runway 3. Sufficient to hit key milestones for Series A 4. Accounts for unexpected challenges/opportunities

### Use of Funds - Engineering team expansion (2 engineers): 40% - Sales & marketing initiatives: 25% - Product development: 20% - Operations & buffer: 15%

### Valuation Target - Given current traction and market: $5-7M cap on SAFE - Alternative: 20% discount with $8M cap

## Strategic Considerations

1. **Runway Management** - Keep 6-month buffer minimum - Clear milestone-based hiring plan - Maintain ability to extend runway if needed

2. **Investor Profile** - Target mobile/developer tools focused investors - Seek strategic angels with mobile app or SDK experience - Look for investors who can help with enterprise sales

3. **Alternative Scenarios** - Conservative case: Raise $750K with tighter burn - Aggressive case: Raise $1.5M to accelerate growth - Bootstrap longer: Focus on self-serve motion first

Based on this model, here are my key recommendations:

1. **Fundraising Strategy:** - Raise $1M to provide 18-24 months runway - Focus on strategic investors who understand mobile/SDK space - Structure as SAFE with $5-7M cap - Start raising when you have 3-5 happy beta customers

2. **Key Questions to Address:** - What's your thought on the revenue model? Should we consider usage-based pricing? - How do you plan to approach self-serve vs. sales-led growth? - What are the main risks that could affect this model? - Would you prefer to raise less and focus on reaching profitability sooner?

3. **Risk Mitigation:** - Build a clear path to $100K ARR before raising - Have contingency plans for slower growth - Consider alternative monetization strategies - Keep burn rate flexible based on traction

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