Series A fundraises focus on growth.

The goal of the fundraising pitch is not to show that you can sell the product to someone, but rather that you can grow the business.

Here are some key metrics to evaluate the startups’ growth story:

Revenue — this can be done on a month-over-month, quarter-over-quarter, or year-over-year basis.

Focus on net revenue.

Revenue model — this could be subscription, transaction fees, fees for service, or more.

Focus on how much of the revenue is recurring or repeating.
Customer concentration — this measures how much revenue comes from a handful of customers.

Compare the revenue from the top 3, 5, 10, and 20 customers to see if there’s too much concentration.

Gross margin — measures the difference between the net revenue and the cost of goods sold.

The healthier the margins, the more resilient the business.

CAC:LTV — this ratio compares the cost of customer acquisition to the lifetime value of the customer.

For a Series A company, this should be 1:5 or 1:7.

Focus on these key metrics in evaluating a Series A company.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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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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Disclaimer:
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.