Capital Allocation for Competing Product Bets
The Challenge
CFOs and CEOs often struggle to allocate limited capital across competing priorities and justify early-stage product bets to investors. Our client faced this exact problem: with a $10M R&D budget for a nascent product (with over 30 proposed features to build), what was a realistic yet ambitious goal? How should they prioritize must-have features, allocate capital, and define expected ROI in stages for the product roadmap?
Our Approach
Top-down goal setting: Used market analysis to size the long-term potential of the product bet and define ambitious targets, e.g., achieving 3X growth in the first year to capture meaningful headroom.
Growth levers analysis: Built a detailed understanding of product, pricing, conversion, seasonality, engagement, retention, and churn to set a baseline and identify what would drive growth.
Feature-level modeling: Reviewed proposed product features and investments, modeling expected impact and required resources for each feature build proposed. Produced a clear priority list linking each feature to estimated ROI and capital required.
Trade-off and sequencing: Reconciled top-down targets with the investment envelope to make data-driven decisions on allocation and roadmap sequencing.
The Impact
Delivered a fact-based, ambitious capital allocation framework, providing the CFO and leadership with:
Clear, measurable KPIs along the way of product build (e.g., conversion targets to reach 3X growth)
A prioritized, dollar-backed roadmap for product and R&D investments
Decision-making guardrails to track progress and adjust as the product developed
This approach enabled the client to invest confidently in early-stage bets while keeping resources aligned to the most impactful opportunities.
