Startup Funding Espresso Using Metrics in Your Valuation
Using Metrics in Your Valuation Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Metrics can help drive the valuation for your startup fundraise. Here is a list of key metrics to include: Number of visitors to your website and their conversion to paying customers. The higher the conversion rate, the lower the cost of sales and the greater the valuation. Average revenue per customer. The higher the average revenue, the easier it will be to achieve scale. Monthly or annual recurring revenue. This is the key driver for calculating forward multiples of a valuation. Revenue run rate. If your revenue is still ramping up, consider taking the current monthly revenue and multiplying it by 12 to give you an annualized revenue run rate.\xa0\xa0 This will make your annualized revenue bigger than a look-back method. Contribution margin. If you have high gross margins, include this in your valuation calculation as this will translate into more dollars going back into the business. Customer acquisition vs. lifetime value. This ratio should be at least 1:3, but if it\u2019s 1:5 or better, it can improve your valuation. Churn rate. This is the rate at which customers stop using your product or service. The lower the rate, the better the valuation. Viral coefficient. This measures how fast your product moves from one customer to the next through referrals. A highly viral product will garner a much higher valuation. 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\xa0 For Feedback please contact info@tencapital.group\xa0\xa0\xa0 Please , share, and leave a review. Music courtesy of .