Have you ever wondered why a majority of startups fail right at the beginning?
The answer lies in these three words: Customer Acquisition Cost.
Customer Acquisition Cost or CAC of a company refers to the total sales and marketing cost required to acquire a new customer over time. Successful businesses strive to constantly reduce the cost of customer acquisition, not only to recoup revenue but also because it’s a sign of the company’s overall health.
A recurring issue for startups is the high CAC, which often occurs when the startup ends up spending more money on acquiring customers than the revenue they generate in return. This leads to cash burns and dampens the company’s overall profitability.
One of our brand partners, Melvano, had also encountered this problem. Read further to know how we dealt with it!
Melvano is an IIT Madras-backed adaptive learning platform that provides personalised coursework to students preparing for IIT, JEE, and NEET that addresses their weaknesses and guides their next steps. This makes the overall process simpler and easier for students so that they can make the most of the resources the brand has to offer.
The process is structured to provide students with all the assistance they need, from relevant content to using technology that simulates the classroom environment to ultimately assisting them in applying the concepts they learn.
Before their association with Tyke, startups like Melvano were spending 3 times more on CAC after the pandemic, with offline centres reopening.
Although their product offering is distinctive, they face fierce competition from ed-tech giants such as Vedantu, UpGrad, Unacademy, and many others.
It takes time and money to promote the app on YouTube, Instagram, Facebook, and other social media platforms… two resources that most startups lack in abundance.
Despite having raised 1.6 crores from marquee investors to support their future plans, they were looking for more. Preferably without returning to the traditional path of acquiring capital.
However, it is almost unheard of for startups to raise funds solely from users and patrons who believe in their vision.
This is where we reached out to Taran the founder of Melvano and introduced them to Tyke. We at Tyke are building a platform that capacitates founders like Taran Singh Founder of Melvano to convert their community into capital through CSOPs.
Community Stock Ownership Plans or CSOPs are contractual agreements between the company and the subscriber. In comparison to more traditional instruments, they enable startups to allow a larger pool of subscribers to participate in their growth because the minimum ticket size can be kept low.
Tyke serves as a simple and quick fundraising management platform for founders. From accelerating the fundraising by reducing the endless paperwork to helping founders track their campaign metrics with intuitive dashboards, we do it all! This lets founders spend their valuable time working on their startup rather than worrying about fundraising.
Melvano applied to raise funds on Tyke, and to their surprise, the process was simple, quick, and efficient, from KYC to pitching to getting funded.
They raised 100% of their goal of 50 lakh INR in four days, and within 12 days, they exceeded their goal and rose to 250% gathering capital of over 1.5 crores and are still going strong! We at Tyke, thrive to see these startups grow and nothing makes us happier than their campaign getting such an overwhelmingly positive response.
The cherry on the top? Melvano’s Customer Acquisition Cost had significantly reduced because of this Network Effect. They were able to not only acquire new customers but also retain them. The brand now intends to utilize the additional capital to expand its business into more upskilling courses, exam preparation for UPSC, SSC, and a lot more!
For Melvano, what was once a tedious process of organically gaining customers has now become a streamlined journey of people subscribing to them on Tyke and becoming loyal customers! Taran (Melvano’s Founder) swears that there’s no better way to reduce CAC than through community fundraising.
We are dedicated to empowering all new-age startup founders who want to break free from traditional methods of raising capital and pursue their dreams by making the fundraising process easier, accessible, and coherent.
We are confident that Tyke will support your vision as we did Melvano’s.
Connect with our team to know how much you can save up on CAC and grow with access to easy capital.