How do start-up investors evaluate a company?
What metrics to start-up investors expect to see?
Start-up investors typically look at a variety of financial and non-financial metrics when evaluating potential investments.
Some key metrics that start-up investors may consider include:
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Revenue growth: Investors often look for start-ups with strong revenue growth, as it can indicate that the company is gaining traction in the market and has a viable business model.
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Customer acquisition cost (CAC): This metric measures the cost of acquiring each new customer, and can be a good indicator of the efficiency of the company's marketing and sales efforts.
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Gross margin: The gross margin is the difference between the company's revenue and the cost of goods sold. A high gross margin can indicate that the company is generating good profits from its products or services.
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Net promoter score (NPS): This metric measures customer satisfaction and loyalty, and can be a good indicator of the company's long-term growth potential.
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Burn rate: The burn rate is the rate at which a start-up is using up its cash reserves. A high burn rate can be a red flag for investors, as it may indicate that the company is not generating sufficient revenue to fund its operations.
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Management team: Investors often consider the experience and track record of a start-up's management team when evaluating an investment opportunity.
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Market size: The size of the market that a start-up is targeting can be a key factor for investors, as it can affect the company's potential for growth and profitability.
- Competitive landscape: Investors may also consider the competition that a start-up faces in its market, as it can impact the company's ability to capture market share and achieve profitability.
