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There are several stages of development that a company goes through on its journey to success. Understanding these stages and knowing where you are can help you navigate the challenges and opportunities specific to each phase.

In this blog, we dive into the details of each stage, what it means, and what metrics you should focus on to propel your business to the next!

Pre-Seed Stage

The earliest phase of a start-up’s lifecycle is the pre-seed stage. This is the idea stage. 

At this stage, you’ve discovered your start-up idea and taken the plunge actually to found the business. Your core activities in a pre-seed stage would include:

Funding during pre- seed stage:

Funding during this stage includes approaching pre-seed funding channels like angel investors, crowdfunding platforms, friends, and family to secure the runway till the next stage. The starting number for this can be a few thousand dollars to about USD $50,000. Some angel investors can go up to USD $500,000 too for a pre-seed startup.

It’s interesting to note that pre-seed stage funding is a relatively new concept; previously, pre-seed funding just meant reaching out to friends and family, or taking out loans to get things moving. But lately, startups are proving how quickly they can turn a pre-seed company into a unicorn has allowed an entire industry of Angels, Incubators, Accelerators, and VCs to mushroom and financially support ideas early. 

At the pre-seed stage, investors have very little to go by, so they like to see a founder who is deeply knowledgeable, a reliable team that is driven by a common vision, and a clean track record to help them trust your abilities.

Metrics to focus on to succeed in the Pre-Seed Stage

In the pre-seed stage, it’s best to primarily focus on qualitative metrics and some quantitative metrics, such as:

  1. Customer feedback: Gather as much feedback from potential customers as possible to understand their experience, their pain points, and their expectations—measure using feedback forms or 1-on-1 interviews.
  2. User engagement: If your MVP is already in test, measure user engagement with Page Views, Click-Through Rate, Social Media Follows/Mentions, and Session Durations with your MVP to assess interest and identify areas for improvement.
  3. Product validation: Measure your target market’s willingness to pay for your product or service. These metrics include sign-ups, registrations, downloads, trials, and subscriptions. 

Fin-tech start-up Chexy raised CA$1.3m in pre-seed

An example of a successful start-up in the pre-seed stage is Chexy, Canada’s first tenant-facing payments platform that allows renters to build credit & earn rewards on rent.  In Canada, 3M+ people over the age of 18 are considered ‘credit invisible’. Founded in 2021, Chexy recognized rent as a significant missed opportunity to build credit scores. With an influx of immigrants entering Canada, Chexy started making its mark. They recently secured CA$1.3m in pre-seed funding.

Seed Stage

After the pre-seed stage, you enter the seed stage, which marks the second phase of the growth journey. A stronger validation of the business idea characterizes the seed stage.

Your core activities during this stage should revolve around: 

Funding during the seed stage:

Funding during the seed stage includes approaching seed funding channels like angel investors, VCs, and incubators, for investment to aid launch/growth. Generally, seed funding can be anywhere between USD $500,000 and $2 million. 

Many start-ups meet their fate at this stage when they fail to gain traction even after securing funding. On the other end of the spectrum, we also have startups that don’t need to raise funds after this point because they are able to grow without any further investment.

Metrics to focus on to succeed in the Seed Stage

In the seed stage, you are expected to prove that your hypothesis from the pre-seed stage is bearing fruit and you are, in fact, ready to double down on it and launch/grow, which means your numbers need to start showing up. Focus on key metrics like: 

  1. User acquisition: Measure the growth rate of users or customers to demonstrate market the potential for further adoption. Track new registrations, sign-ups, customer acquisition costs (CAC), viral coefficient (referral effectiveness), and attribution metrics (first-touch, last-touch, multi-touch).
  2. Engagement metrics: Track user engagement like active users/customers, retention rate, churn rate, frequency of use, feature adoption, CTR, social media interactions, and user-generated content.
  3. Conversion rate: Measure conversion rates of trials, conversion rate by marketing channel, and return on ad spend (ROAS) to assess the effectiveness of the product’s value proposition.

Toronto-based Cookin raised CA$17m in seed funding

Cookin, a food delivery app that has brought the homemade-food sharing economy to Canada, recently raised CA$17m in seed funding. They have already proven their model with thousands of downloads and over 2000 applications for home cooks who want to sign up. They are also expanding their team, bringing in talent from Uber, Apple, and Shopify. Cookin intends to use its seed funding to grow further in Ontario and also launch in the US.

Early Stage/Launch Stage

Until now, your product/service may have been doing the rounds in small circles, local communities, industry forums, or known geographies. Now it’s time to open it up and trust that the foundation you’ve laid will carry the product/service to new customers. 

At this stage, your business should be released into the market to gain validation across larger circles/areas. This validation should then inform strides toward growth or expansion. Activities during the early/launch stage typically include:

Metrics to focus on to succeed in the Early/Launch Stage:

Metrics to focus on to succeed in the Early/Launch Stage

1. Monthly recurring revenue (MRR)

2. Customer acquisition cost (CAC)

3. Customer lifetime value (CLTV)

4. Churn rate

5. Net promoter score (NPS)

6. Customer retention rate (CRR)

7. Average revenue per user (ARPU)

8. Conversion rate

9. User feedback and reviews

During this stage, start-ups need to track and analyze key metrics to measure the success of their business model. This stage is all about the numbers and bringing in traction in the form of customers and revenue, which can lead to growth or expansion strategies. Some metrics to focus on include:

1. Monthly recurring revenue (MRR): Tracking the growth of monthly revenue from subscription-based or recurring revenue models.
2. Customer acquisition cost (CAC): Evaluating the cost associated with acquiring each new customer.
3. Customer lifetime value (CLTV): Measuring the total revenue generated by a customer over their lifetime as a user.
4. Churn rate: Monitoring the rate at which customers or users are leaving the product or service.
5. Net promoter score (NPS): Assessing customer satisfaction and loyalty through recommendations.
6. Customer retention rate (CRR): Measuring the % of customers or users retained over a specific period.

7. Average revenue per user (ARPU): Calculating the average revenue generated per user or customer.
8. Conversion rate: Tracking the % of leads or prospects that convert into paying customers.
9. User feedback and reviews: Analyzing user feedback, reviews, and ratings to identify areas for improvement.

Growth Stage

The growth stage is an exciting phase because it means you have finally arrived. You are considered an established startup that has achieved product-market fit and is now experiencing a surge in customer acquisition, revenue, and market presence!

The growth stage is characterized by:

Funding during the growth stage:

Seeking Series B funding for expansion does not have a lot of upper limits considering you have already proven your business model. Most startups in this stage rarely have to look for funds; you may see a lot of incoming interest from investors. Companies can decide if they want to invest depending on their growth strategy. Series B funding can range from $10 million to an easy $20 million.

Metrics to focus on to succeed in the Growth Stage:

Heading: Metrics to focus on to succeed in the Growth Stage:

1. Revenue growth rate 
2. Customer lifetime value (CLV)
3. Gross margin
4. Customer churn rate
5. Market share
  1. Revenue growth rate: Measure the rate at which revenue is growing to assess the overall financial performance and success of the business. 
  2. Customer lifetime value (CLV): Calculate the projected revenue a customer will generate over their lifetime. Focus on increasing CLV through upselling, cross-selling, and customer retention strategies.
  3. Gross margin: Monitor the difference between revenue and the cost of goods sold. Improving gross margin indicates better profitability and efficiency in delivering products or services.
  4. Customer churn rate: Measure the rate at which customers are discontinuing their relationship with the business. Minimizing churn is crucial for sustainable growth and profitability.
  5. Market share: Evaluate the percentage of the total addressable market that your startup has captured. Increasing market share indicates a growing presence and competitive advantage.

Canadian Super (previously Snapcommerce) successfully secured US$85m in growth funding

Super is a “first-of-its-kind, debt-protecting card” that provides people with rewards and cashback while allowing them to build credit. The company raised its growth funding of US$85m at a stage where it had already surpassed $1 billion in sales, saved consumers $145 million, and netted a revenue of over $100 million with its commerce model previously known as Snapcommerce. When they opened up their credit card product, they garnered a waitlist of 7 million customers! Between 2021-2022, they also increased their employee count from 70 to 200.

Expansion Stage

After the growth stage, you enter the expansion stage. Now an experienced, mature startup in your industry – everything shifts into high gear to scale up, conquer new markets, and solidify your position in the industry.

You would be busy with big things in this phase:

Funding during the expansion stage:

Series C and above funding is mostly reserved for mature expanding/scaling start-ups with valuations over US $100 million. Companies use these funds to expand to new markets or territories. Just like the growth stage, being an established startup, there is rarely a dearth of funding channels in the expansion stage too. VC firms specializing in late-stage startups, private equity firms, hedge funds, and investment banks would be happy to back your expansion; it really boils down to the best deal for you.

Metrics to focus on to succeed in the Expansion Stage:

Metrics to focus on to succeed in the Expansion Stage:

Market penetration
Customer acquisition efficiency
Revenue diversification
 International expansion metrics
Customer satisfaction and loyalty
  1. Market penetration: Measure percentages of the target market that your start-up has captured. Monitor market share and track the growth rate to evaluate the effectiveness of expansion efforts.
  2. Customer acquisition efficiency: Analyze the cost-effectiveness of acquiring new customers in new markets. Measure metrics such as customer acquisition cost (CAC), customer lifetime value (CLV), and payback period to optimize customer acquisition strategies.
  3. Revenue diversification: Assess the contribution of different revenue streams to the overall revenue mix. Aim for a diversified revenue base to mitigate risks and capitalize on multiple growth opportunities.
  4.  International expansion metrics: Track key performance indicators specific to international markets, such as market entry costs, localization efforts, revenue from international operations, and customer acquisition in new regions.
  5. Customer satisfaction and loyalty: This metric never goes out of style, no matter the stage! Monitor customer satisfaction levels and track metrics like Net Promoter Score (NPS) or customer retention rate. Strong customer satisfaction and loyalty is always the best indicator of a successful expansion.

Telemedicine start-up Maple scales to new markets with acquisitions and by increasing the breadth of services

Maple is a digital healthcare platform that enables patients to connect directly with medical care specialists on their phones or computers. Founded in 2017, Maple is considered one of North America’s fastest-growing companies and Canada’s leading virtual care platform. They have served over 4 million patients. Maple has been expanding their market footprint by acquiring companies like Wello – a Calgary-based company that also provides virtual care. This acquisition will add approximately 350 new corporate clients to Maple’s roster. Maple also chose to branch into the mental health space with Mind by Maple, which offers comprehensive mental health services. 

Additionally, Shoppers Drug Mart invested CA $75 million for a minority stake in Maple. This partnership facilitated the development of new healthcare programs and enhanced in-person and virtual healthcare services.

Exit Stage

The exit stage of a start-up’s journey is not necessarily required. Many startups have goals that aren’t focused on exits. Many want to be long-term, high-value companies. 

However, for those who are in this stage or would like to see themselves in this stage, the exit stage involves preparing for a significant liquidity event, such as an acquisition, initial public offering (IPO), or merger. 

During this stage, the focus shifts from growth and expansion to maximizing value for investors and stakeholders. Start-ups in the exit stage aim to attract potential buyers or investors while ensuring a smooth transition for their customers and employees.

You can expect the following from this stage:

Metrics to focus on in the Exit Stage:

  1. Valuation: Monitoring the company’s valuation and ensuring it aligns with industry benchmarks and investor expectations.
  2. Revenue and Profitability: Demonstrating consistent revenue growth and sustainable profitability to increase the company’s attractiveness to potential buyers or investors.
  3. Market Share: Evaluating the company’s market share and growth trajectory compared to competitors, showcasing its position in the market.
  4. Investor Returns: Tracking the return on investment for early-stage investors to provide evidence of the company’s growth potential and value creation.

AbCellera Biologics – the largest-ever IPO for a Canadian biotech company

Founded in 2012, AbCellera is a Vancouver-based drug discovery platform that searches and analyzes immune systems. AbCellera has executed 4 strategic acquisitions in its lifetime to expand and scale, one of them being San Francisco-based Trianni for $90 million USD. The acquisition was followed by a CA$144 million Series B funding round. 
In 2020, AbCellera set out to raise $200 million through their IPO, but because of their much-anticipated success, they increased the size of their IPO 3 times. Finally, within minutes of listing on the NASDAQ, the stock price tripled from its IPO price of $20 per share to over $70, pulling in gross proceeds of $555.5 million.

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