Startup Funding Espresso -- Understanding Business Models
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In analyzing potential investments, it\u2019s important to understand their business model and how well it meets the venture investors\u2019 requirements.\xa0 The business model consists of unit and customer acquisition economics as well as market and business economics. Unit economics is the cost to provide a product that drives gross margin.\xa0\xa0 This determines how much revenue is left to cover the business expenses.\xa0\xa0 In general, 40% gross margin should be the floor. Customer acquisition economics is the cost of acquiring a customer which drives scalability.\xa0\xa0 This determines how much you have to spend to grow sales. In general, your cost of customer acquisition should be \u2153 or less than your average customer revenue. Market economics is the cost of penetrating a market which will drive fundraising requirements.\xa0\xa0 This determines how much funding you have to raise to capture a portion of the market.\xa0 You must show a growth rate of at least 50% year over year to continue raising funding.\xa0 Business economics is the cost of running the business which drives profitability. This determines how soon you can achieve cash flow positive and no longer have to raise funding to stay alive. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let\u2019s go startup something today. ___________________________________ For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out \xa0 For Feedback please contact info@tencapital.group\xa0\xa0 Music courtesy of