VC投资
PNL:
Cash statement:
Balance sheet: Deployed capital
早期更看KPI: DAU/MAU, User engagement; Later stage: 1) can you demonstrate persistent growth? 2) how profitable will you be when you reach scale?
Unit economics to determine profitability:
LTV can be a trap - companies can manipulate how long customers can stay with you? LTV/CAC: use gross profit for LTV, looking at 3-year instead of 5-year, use actual retention to project 3 years
Changing KPI's from time to time can be a red flag
Retention MATTERS to any business model
Comparing across models can be challenging
Efficiency spent on sales teams is important in B2B model
Bottom-up forecasting rather than top-down forecasting - built the model on supply and sanity check with demand, ideally the two will inform each other
Cash is King!!
look closely on YoY, do a lot of sensitivity analyses to gauge how bad can it be
spent a lot of time on operating expenses - what happened to cost bases under different scenarios of revenue declining
1) start with revenue, do sensitivity analysis on revenue growth
2) compare with opex budget, across all scenarios
3) what's the cash runway if things get really bad
VC估值
Years of historical actuals is ‘evidence’ that the startup can deliver the product and customers are willing to pay — proving two core assumptions for early stage startups.
The increase in valuation over time (the future valuation minus today’s valuation) is the upside potential that founders and investors both benefit from to account for the risk they both take today.
There are two Finance To Value rules: Don’t raise more money in a given financing round than you can create in incremental value during that capital window. Don’t let the post-money value of your round get higher than you can grow into during the capital window. Fred Wilson
Startup Metrics
Reminder, here’s a way to calculate LTV:
Revenue per customer (per month) = average order value multiplied by the number of orders.
Contribution margin per customer (per month) = revenue from customer minus variable costs associated with a customer. Variable costs include selling, administrative and any operational costs associated with serving the customer.
Avg. life span of customer (in months) = 1 / by your monthly churn.
LTV = Contribution margin from customer multiplied by the average lifespan of customer.
Cumulative charts by definition always go up and to the right for any business that is showing any kind of activity. But they are not a valid measure of growth — they can go up-and-to-the-right even when a business is shrinking. Thus, the metric is not a useful indicator of a company’s health.
Investors like to look at monthly GMV, monthly revenue, or new users/customers per month to assess the growth in early stage businesses. Quarterly charts can be used for later-stage businesses or businesses with a lot of month-to-month volatility in metrics.
Investors tend to focus on net burn to understand how long the money you have left in the bank will last for you to run the company. They will also take into account the rate at which your revenues and expenses grow as monthly burn may not be a constant number.
Billings is a much better forward-looking indicator of the health of a SaaS company than simply looking at revenue because revenue understates the true value of the customer, which gets recognized ratably. But it’s also tricky because of the very nature of recurring revenue itself: A SaaS company could show stable revenue for a long time — just by working off its billings backlog — which would make the business seem healthier than it truly is. This is something we therefore watch out for when evaluating the unit economics of such businesses.
Another common problem is to calculate CAC as a “blended” cost (including users acquired organically) rather than isolating users acquired through “paid” marketing. While blended CAC [total acquisition cost / total new customers acquired across all channels] isn’t wrong, it doesn’t inform how well your paid campaigns are working and whether they’re profitable.
We also like seeing the breakdown by dollars of paid customer acquisition channels: for example, how much does a paying customer cost if they were acquired via Facebook?
Gross churn: MRR lost in a given month/MRR at the beginning of the month.
Net churn: (MRR lost minus MRR from upsells) in a given month/MRR at the beginning of the month.
The difference between the two is significant. Gross churn estimates the actual loss to the business, while net revenue churn understates the losses (as it blends upsells with absolute churn).
A few examples to illustrate the point: E-commerce businesses typically have relatively low gross margins, as best exemplified by Amazon and its 27% figure. By contrast, most marketplaces (note here the distinction between e-commerce) and software companies should be high gross-margin businesses.
Inventory turns typically are calculated by dividing the cost of goods sold for a period against the average inventory for that period. The most typical period used is annual.
There are two different ways to improve inventory turns — (1) By increasing sales velocity on the same amount of inventory; (2) By decreasing the inventory needed to generate a given amount of sales. While both are fine, one caution on the latter: Managing inventory too closely can potentially impact sales negatively by not having enough stock to fulfill consumer demand.
By increasing engagement and higher margins, network effects are key in helping software companies build a durable moat that insulates them from competition.
Virality is often measured by the viral coefficient or k-value — how much users of a product get other people to use the product [average number of invitations sent by each existing user * conversion rate of invitation to new user]. The bigger the k-value, the more this spread is happening. But it doesn’t only have to happen by word-of-mouth; the spread can also occur if users are prompted but not incentivized to invite friends, through casual contact with participating users, or through “inherent” social graphs such as the contacts in your phone.
The two trends we like to see in cohort analyses are:
1. Stabilization of retention in each cohort after a period such as 6 or 12 months. This means you are retaining your users and that your business is building a progressively larger base of recurring usage.
2. Newer cohorts performing progressively better than older cohorts. This typically implies that you are improving your product and its value proposition over time — and also gives us an indication of the team’s capabilities.
As a rule of thumb, we tend to prefer companies with relatively low customer concentration because a business with only one or few customers runs a number of risks.
SEO is the process of optimizing website visibility in a search engine’s “unpaid” results through carefully placing keywords in metadata and site body content, creating unique and accurate content, and even optimizing page loading speed. SEO impacts only organic search results and not paid or sponsored ad results. SEM, on the other hand, involves promoting your website through paid advertising or listings, whether in search engines or promoted ads in social networks. SEO and SEM are thus complementary not competing services and many businesses use both.
Other
O2O is simply shifting the discovery and payment online
Groupon is not a gimmick or a game, but a successful example of offline commerce being driven by an online storefront and transaction engine.
There are two Finance To Value rules:
Don’t raise more money in a given financing round than you can create in incremental value during that capital window.
Don’t let the post-money value of your round get higher than you can grow into during the capital window.
