Daniel Eyman’s Post

Indicators Investors Use to Evaluate Startups 📈💡 When it comes to securing funding, investors rely on key metrics to assess a startup’s potential. Here are some critical indicators they track: 1. Monthly Recurring Revenue (MRR) 💵 Consistent, growing MRR is a top signal of product-market fit and financial health. The higher your MRR, the more confident investors are in your growth potential. 2. Customer Acquisition Cost (CAC) vs. Lifetime Value (LTV) ⚖️ A low CAC and high LTV ratio signal efficient growth. Investors love startups that can acquire and retain customers cost-effectively while maximizing their lifetime value. 3. Gross Margin 📊 Strong gross margins reflect the profitability of your product/service. Investors pay close attention to margins to understand how efficiently you can scale and generate profit. 4. Burn Rate & Runway ⏳ How much cash is your startup burning each month? Burn rate and your cash runway tell investors how long you can operate before needing more funding. 5. Churn Rate 🔄 High customer retention (low churn) is a great sign that your product is sticky. Investors want to see that you can retain customers and avoid high turnover. 6. Net Revenue Retention (NRR) 📈 Are your existing customers spending more over time? A strong NRR shows that your business is growing not just by acquiring new customers but also by expanding existing accounts. 7. EBITDA/Operating Profit Margin 📉 Investors use EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) to gauge your startup’s core profitability. It highlights how well you can generate income from operations. 8. Payback Period 💰 How long does it take to recover the cost of acquiring a customer? A short payback period tells investors your business can reinvest in growth faster. Investors look for sustainable growth, healthy unit economics, and clear pathways to profitability. Master these metrics, and you’ll have a much stronger pitch for securing funding! 💡🚀 #Startups #InvestorInsights #MetricsThatMatter #VentureCapital #GrowthMetrics #Finance

📌 Navigating Startup Challenges with Sensitivity Analysis In the dynamic world of startups, making informed decisions is crucial. Recently, I applied sensitivity analysis to a pricing model for a Startup Organization , and the insights were transformative. The Scenario: We aimed to understand how variations in product price (KES/SQM) and sales volume (SQM) would impact on profitability. With fixed costs at KES 300,000/month and variable costs at KES 1,000/SQM, we needed clarity. ✨ Insights Gained: Pricing Adjustments: Lowering prices increased sales but couldn't cover fixed costs. Conversely, higher prices improved profit per unit but risked reducing sales volume. Volume Strategies: Increasing sales volume helped spread fixed costs over more units, enhancing overall profitability. 💫 Key Takeaway: Sensitivity analysis illuminated how changes in pricing and sales volume could significantly affect the organization's financial health. This understanding empowered us to make strategic decisions that balanced pricing and sales strategies effectively. For entrepreneurs, I highly recommend incorporating sensitivity analysis into your financial planning. It's a powerful tool to navigate uncertainties and steer your startup toward success. #FP&A #FinancialInsights #Analysis #Finance

Investing in startups can be lucrative yet risky. Evaluating potential success requires understanding critical metrics like ROI, CAC, LTV, customer retention, and gross margin. These metrics provide insights into financial health, market positioning, and growth potential, enabling informed investment decisions. A few of the essential indicators are: 1.Revenue Growth Rate 2.Customer Acquisition Cost (CAC) 3.Customer Lifetime Value (CLTV) 4.Burn Rate 5.Runway 6.Profit Margin 7.Monthly Recurring Revenue (MRR) 8.Churn Rate 9.User Engagement Market Share https://lnkd.in/dRpwE-HG Read the full blog for detailed insights #Investiaa #StartupInvesting #Metrics #ROI #CustomerAcquisition #Innovation  #ROI #CustomerAcquisition

Startup investing can be profitable yet risky. Discover 10 essential metrics like ROI, CAC, and LTV that provide crucial insights into financial health and growth potential. Learn how to make informed investment decisions.

Startups Series 1.1 According to the reputable market intelligence Agency CB Insights, Pricing is one of the top reasons Startups fail.   There is no magic formula for setting Prices. Yet, profitable pricing requires realistic Cost estimation, accurate competitive analysis, a Solid understanding of your marketing objectives and A lot of intuition. There is a groundwork that Needs to be done first. Next, pricing Objectives need to be formulated. Thirdly, Pricing strategy comes out of the objectives. Today’s 3-minute-read blog will open your Eyes to this overlooked element in the marketing mix; Yet, the most crucial upon which your profitability is based. Click on the link below: https://lnkd.in/dGiXXCNy #Pricing #Strategy #Competition #Profits

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💲 📈 Rethink Funding: Build Your Business with Customers, Not Investors Inspired by insights from The Customer-Funded Business by John Mullins, this approach challenges conventional startup wisdom: Why chase investors when your customers can fund your growth? 🚀 Key Models for Customer-Funded Success: 1️) Pay-in-Advance Model: Get payments upfront—think consultants, architects, and early Dell computers. 2️) Matchmaker Model: Connect buyers and sellers for a fee, like eBay or Airbnb. 3) Subscription Model: Build recurring revenue through memberships or subscriptions, as seen with Netflix or SaaS platforms. 4️) Scarcity Model: Use limited-time offers or exclusivity to drive demand, like Zara. 5️) Service-to-Product Model: Start with a service and transition to scalable products, as Microsoft did in its early days. 💡 What These Models Share: Cash Flow First: Negative working capital means no need for external funding to start. Proven Value: Once established, raising growth capital becomes easier, as your concept is validated. Adaptability: These models work across B2B and B2C, for goods and services alike. Why It Matters for Entrepreneurs: Too much capital too early can distract founders, dilute ownership, and force rigid execution on unproven ideas. Instead, let your customers be your investors, validating your business while keeping you agile. At MicroGlobals, we help organizations implement sustainable growth models inspired by frameworks like these. Let’s discuss how you can apply customer-funded strategies to scale smarter. 📩 Contact us at [email protected] 🌐 Learn more at microglobals.org #CustomerFunding #Entrepreneurship #ScalingUp #MicroGlobals

 Real-World Business Valuation Examples: Understanding Practical Applications Valuing a business isn’t a one-size-fits-all process. The method you choose depends on the business’s nature, stage, and the purpose of the valuation. Let’s look at 3 real-world examples to see how different valuation methods are applied in practice: 1. Asset-Based Valuation: Manufacturing Business Example 🔹 Scenario: A manufacturing company with significant machinery, inventory, and property seeks a valuation for a potential sale. Despite its assets, the business has modest profitability. 🔹 Approach: Adjusted Net Asset Method — The value of tangible assets (machinery, property) is adjusted to market value, while intangible assets are not heavily considered. 🔹 Outcome: The valuation is based on the company’s physical assets, reflecting the fact that buyers are primarily interested in tangible resources, not earnings. 2. Income-Based Valuation: Startup Valuation Using DCF 🔹 Scenario: A SaaS startup with predictable, recurring cash flows seeks funding but lacks significant tangible assets. 🔹 Approach: Discounted Cash Flow (DCF) analysis — Projects future cash flows over five years and discounts them using a risk-adjusted rate. Future growth assumptions are incorporated into the model. 🔹 Outcome: The valuation is based on the company’s potential earnings, helping it secure investment based on expected future performance rather than current profitability. 3. Market-Based Valuation: Tech Company Using Comparables 🔹 Scenario: A private tech company with high growth potential plans to sell equity. It operates in the same industry as several publicly traded competitors. 🔹 Approach: Comparable Company Analysis (CCA) — Uses publicly available valuation multiples (e.g., price-to-sales ratio) of similar companies to determine its value. 🔹 Outcome: The valuation aligns with market trends and reflects the price investors are willing to pay for similar companies in the sector. 💬 Which valuation method would you use for your business? Have you used any of these methods in your experience? Drop your thoughts in the comments below! #BusinessValuation #ValuationMethods #Entrepreneurship #Investment #SaaS #TechStartups #BusinessGrowth

Startup Pitches: Aligning Investor Questions with Market Insights Are you a startup preparing for your next investment pitch? Here's how a comprehensive market review can help you address key investor questions: 1. "What's your target market size?" → Benefit: Accurate market size estimations and growth projections 2. "Who are your main competitors?" → Benefit: Detailed competitor analysis and positioning map 3. "What's your unique value proposition?" → Benefit: Clear differentiation points based on market gaps 4. "How will you acquire customers?" → Benefit: Identified customer segments and effective acquisition channels 5. "What's your revenue model?" → Benefit: Pricing strategies aligned with market expectations 6. "How scalable is your business?" → Benefit: Market expansion opportunities and potential barriers 7. "What are the key market trends?" → Benefit: Insights on emerging trends and their impact on your business 8. "What are the regulatory challenges?" → Benefit: Overview of relevant regulations and compliance requirements 9. "How will you use the investment?" → Benefit: Data-driven allocation strategies based on market priorities 10. "What's your exit strategy?" → Benefit: Potential acquirers and market consolidation trends Startup managers, avoid pitching before gaining these crucial market insights. Consider leveraging Webintelligency's market review services to boost your pitch confidence and increase your chances of securing investment. #StartupPitch #MarketInsights #InvestorReadiness

Stop Obsessing Over Projections—Focus on the Assumptions Behind Them Here’s the reality: it’s not the numbers that matter most, it’s the assumptions driving them. Why? 🔍 Projections are only as good as their foundation: investors know your 5-year forecast is speculative. What they care about is how well you’ve thought through the key drivers behind those numbers. ⚙️ Assumptions reveal strategy: customer acquisition cost (CAC), lifetime value (LTV), market size, and growth rate assumptions reflect your business model’s viability. Are they grounded in data or wishful thinking? 📊 Flexibility over perfection: startups pivot. When assumptions are clear and tested, you can adapt quickly to real-world feedback. Blindly chasing projections can lead you astray. Instead of chasing perfect spreadsheets, ask yourself: • Are my assumptions validated? Have you tested customer behavior, pricing, or adoption rates? • What are my blind spots? What could disrupt your CAC, churn, or sales cycle? • Do I have a feedback loop? Are you continuously refining assumptions based on real-world data? Projections change, but sound assumptions create resilient businesses. That’s what investors and partners are really looking for. #Startups #Entrepreneurship #BusinessStrategy #FinancialPlanning #VC