Fantastic presentation on customer acquisition

January 7, 2014

My good friend Saar Gur who is a general partner at Charles River Ventures just posted a brilliant presentation on customer acquisition. He explains that most startups fail because they don’t acquire customers profitably.

This goes to the heart of how Jose and I invest. As I mentioned in Why we play Moneyball rather than Powerball, we care deeply about unit economics. We want you to show us that even at a small scale your long term value (LTV) per customer is greater than your customer acquisition cost (CAC). In fact, we don’t think a business has great unit economics unless the projected net contribution margin per customer in the first year is 2x the customer acquisition cost.

Saar not only presents how to calculate the CAC and LTV, but presents the various channels and their pros and cons. In our experience, the success of channels varies dramatically from business to business. Google SEM seems to always work for us in businesses with high LTV, but in some cases like fashion where pictures are very powerful, display ads and Facebook can be much more cost effective. We have also been pleasantly surprised by the effectiveness of TV.

Read the presentation.

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What to know:

  • We don't invest in pre-revenue and/or pre-launch companies.
  • We primarily focus in US, Germany, Brazil, UK, France, Russia and Turkey. We might invest in other countries if your company has a global product.
  • We mainly invest in consumer-facing transactional business models. However, we are open to other areas.
  • Please read our Investment Strategy before submitting your startup.

What to expect:

  • If your submission does not follow the guidelines or if it is not a good fit, we will probably not get back to you.
  • If we are interested, we will reply to schedule a follow-up call.
  • The entire process typically takes 3 touch points over the course of 2-3 weeks.

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(only PDF, PPT and PPTX allowed)