There are over 16,000 SaaS startups in India, and it's estimated that over 80 percent of them have the US as their primary target market. For most investors, a key question is the ability of founders to discover product-market fit and execute a US go-to-market plan. For founders, gaining investor conviction in their DNA to make such a journey, build a cross-border organisation, and win against entrenched local competition are the keys to funding.
As an investor who listens to dozens of SaaS pitches a month, I am always surprised to see many Indian SaaS founders miss the opportunity to take on the US GTM (go to market) elephant in the room. The typical pitch focuses on the market size, problem, solution, competition, and projections. These are table stakes—necessary, but not sufficient, and should not take up the bulk of the allotted time.
The best founders spend quality time taking on the elephant. They focus on why they are prepared to grow and scale in the US. They detail specific insights from their journey of customer discovery, customer examples that led to the fine-tuning of the value proposition, and lessons from competitive losses.
These founders connect the dots and sketch the bigger picture of how the company went about the process of finding a product-market fit and used the insights from this journey to fine-tune their US GTM.
Here are four key areas to help recalibrate your dialogue with SaaS investors and increase your chances of getting funded.
Whether it's product-led or sales-led, demand discovery is a journey. I rarely see a successful SaaS journey where the original problem statement survived the PMF discovery journey. Invariably, the customer's problem is slightly or significantly different from the original problem.
For example, in my first startup, we tried to solve configured product pricing for large enterprises. We had an edge in how we represented data, could model large product portfolios, and used sophisticated pricing algorithms to come up with target prices. As we iterated with clients across segments, we discovered that in many verticals, price setting for new products was not the biggest issue for the customer. The bigger challenge was price management for channel partners or helping with large deal pricing for sales teams.
While a lot of our underlying technology was the same, it was a different buyer with a different budget and needed us to go up against different competition. We found that deal pricing was a much bigger opportunity, and we realigned our sales efforts and investment towards where we found profitable scale.
When meeting investors, talk about what assumptions you originally had regarding the US market. How did those change over the past few quarters? What did you discover about the problem and customer that now gives you confidence in that direction?
Articulating this journey of customer discovery to investors is crucial to getting them to buy into your ability to crack the US market.
While current value proposition articulation is important, retracing how you arrived there is worth its weight in gold. Like with customer segmentation, value proposition also evolves into a final form, which is often different from what was initially assumed.
For example, one of our portfolio companies has an entrenched US competitor many times their size. Both products are very comparable in terms of usability and features. The going-in assumption was that lower cost was a key value proposition. Our company discovered its ability to provide 24x7 customer support was more attractive to the client than discounted pricing.
India's customer experience may not be useful when pinpointing a value proposition for a new market like the US. For example, many Indian enterprise companies are okay with custom integrations to their core systems to implement a new SaaS product. US enterprises are, by and large, expecting their SaaS providers to have out-of-the-box API-based integrations to their core systems.
How did you discover your value proposition for the US market? How did this identification lead to a sharper ICP definition? How did you fine-tune your messaging using this new ICP?
When we meet SaaS founders, we closely listen to their PMF evolution narrative. One of the sure-fire ways to get investors excited is to walk through your funnel metrics as you iterate your PMF discovery. While historical ARR reflects what got closed, it does not talk about the improvement in the quality of the funnel. Detail how your funnel metrics have evolved as you assembled all your learnings into a more repeatable GTM. For example, show the time series of the improvement in MQL to SQL that was driven by better and more targeted messaging around your segment-specific value proposition.
Show the improvement in the demo to close rates and overall sales cycle due to increasing inbound volumes. Most importantly, talk about the "why" behind customer satisfaction in terms of renewals and reduction in churn.
Till there is clarity on customer and value discovery, only founders can attract early adopters with their passion and overall vision. But as the market segment, customer and value prop clarity emerge, more folks in the team should be able to take on and complete customer acquisition on their own. It may still be an outbound motion, but there is usually an unmistakable broadening of sales capacity with tighter PMF and messaging.
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What is the rate of new deal closures without founder involvement? What is the strength of your outbound motion in terms of funnel metrics over time? By detailing your improving sales motion and metrics, you lend confidence to the "how" of succeeding rather than just a standard statement of intent.
The road to US GTM is not easy and is littered with companies that misjudged time to PMF and a repeatable sales motion. Founders are also under pressure to project strong growth when fundraising to bolster valuation expectations despite a lack of clarity on US GTM. One can also misread early ARR and some customers with PMF.
As founders get past angel funding into their first institutional conversations on US market entry, they must be clear on the reasons for the fundraising. Is it to discover product market fit? Or is it to achieve post-product market fit acceleration?
These questions are worth spending time on. These are very different choices, and investors are much more likely to appreciate clarity of thought in this area.
By addressing proof points in your customer, market, and value proposition discovery and detailing how you have used these to drive your strategy, you stand a much stronger chance of building a realistic picture and winning investors.
The writer is the managing director of Arkam Ventures.
The thoughts and opinions shared here are of the author.
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