Characteristics of Revenue

Not all revenue is the same.

There are several characteristics that define the quality of revenue.

Here’s a list to consider:

Predictability — if the revenue is recurring it has higher predictability and thus a greater value.

Concentration — the more sources you have the stronger the revenue as you avoid over-concentration of customers.

Diversity — the greater the number of use cases for the product drives diversity which provides greater value as your revenue is not at risk of changes in the market.

Contracts — having contracts gives greater value to the revenue as it strengthens the predictability of it.

Customer solvency– revenue from a customer that is profitable has greater value as it increases the chance that it will continue.

Look for these characteristics to understand the quality of your revenue.

 

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.