Many people dream of becoming entrepreneurs, and often the biggest...
Letting technology do the heavy lifting for certain monotonous tasks...
Accurate accounting is the bedrock of any successful...
Distinguishing between independent contractors (1099) and employees (W-2)...
August 9, 2022
Before considering an investment, venture capitalists require precise information as to what the business seeking funding has accomplished, as well as what remains to be done. To do this, VCs rely on an array of key performance indicators to help minimize risk and maximize returns.
In an economic downturn in particular, KPIs that convey efficiency come to the forefront for VCs. They want to know that you’re building a highly efficient business before making an investment decision. Among the most important KPIs that VCs will be considering are:
The revenue growth rate KPI measures the rate at which your annual recurring revenue (or sometimes month over month revenue) is growing and provides an indicator of how fast your startup is scaling.
Businesses should aim to have enough cash on hand to continue general operations for at least 18 to 24 months. Cash runway refers to the duration of how long your cash reserves will last before you’ll need additional funding.
This figure should be recalculated at regular intervals since it can change over time. Maintain as much runway as possible to attract potential investors.
The gross profit margin KPI measures how much profit you earn on each sales dollar before factoring in expenses. It helps investors evaluate your business’ efficiency at generating profit for each dollar of costs involved and lets them compare its performance against competing firms.
The average sales cycle KPI refers to the average amount of time from first contact with a lead to closing a deal, which varies depending on the type of industry.
This KPI is used to assess the overall performance of your sales strategy. The shorter the length of the sales cycle, the better.
The burn multiple KPI represents a business’s burn relative to its revenue growth. First coined by entrepreneur David Sacks, this KPI measures the efficiency of growth.
The smaller the burn multiple is, the more efficient the growth is; the higher it is, the more you’re burning to achieve every unit of growth.
The customer acquisition cost KPI represents the amount of money your business must spend, including sales and marketing efforts, to acquire a single new customer.
Monitoring your business’s CAC confers the benefit of helping you stay on top of which marketing strategies are working best. When times are lean, you do not want to waste cash on ineffectual tactics.
The CAC payback period KPI measures the number of months required by a company to recoup the initial costs to acquire a new customer. It shows investors how well the business drives return on invested capital.
The customer churn rate KPI measures the number of customers you lose in each period. A high churn rate and low monthly recurring revenue necessitate immediate action, as retaining customers is easier than acquiring new ones.
Escalon has helped over 5,000 companies across a range of industries to utilize the experience and knowledge of financial experts to tailor their financial strategies and solutions. Talk to an expert today.
Our team is made up of seasoned professionals who bring years of industry experience to the table. You gain a trusted advisor who understands your business inside out.
Say goodbye to the hassles of hiring, training and managing in-house finance teams. You will never have to worry about unexpected leave of absence or retraining new employees.
Whether you’re a small business or a global powerhouse, our solutions scale with your needs. We eliminate inefficiencies, reduce costs and help you focus on growing your business.
Accurate accounting is the bedrock of any successful business operation. Yet, medium-sized businesses—those that have grown beyond the small-business stage...
Distinguishing between independent contractors (1099) and employees (W-2) is a pivotal compliance matter for U.S. businesses. Misclassification can result in...
Spring symbolizes renewal, making it an apt metaphor for startups aiming to secure fresh capital to fuel their next growth...
Payroll is more than just issuing paychecks—it’s a complex, high-stakes process that can significantly impact employee satisfaction, legal compliance, and...
For startups seeking sustainable growth, every quarter provides a treasure trove of data—but Q2 data can be particularly revealing. By...
By the time Q2 rolls around, many startups have a clearer picture of their performance and market positioning compared to...
For many startups, the summer months can be a dual-edged sword. On one hand, warmer weather and looming vacations can...
Tax season often triggers stress and complexity—especially for startups laser-focused on building products, acquiring customers, and scaling operations. Yet savvy...
The halfway mark of any given year is more than just a date on the calendar; it’s a valuable checkpoint...