Investor Connect Podcast

Unit Economics

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In the early days of a startup, the revenue is small.

Instead of focusing on the absolute size of the revenue, focus on the unit economics of the business.

Unit economics shows your business model on a per-unit basis.

Measure the cost of acquiring each customer and the revenue you receive from the same.

You can calculate the CAC:LTV ratio which is the cost of acquiring the customer and compare it to the lifetime value of the customer. 

You can also calculate the time of payback compared to the cost of customer acquisition.

The faster the payback time, the less capital you will need to raise and, therefore, the more valuable your business will be.

Investors are not looking for big numbers; they are looking for repeatability and predictability of your revenue.

Use unit economics to show how you have built a working business albeit on a small scale.

Emphasize the systems you have in place for acquiring customers, providing a service, and how overall it’s a profitable business.

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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Music courtesy of Bensound.

Direct download: Unit_economics.mp3
Category:general -- posted at: 6:00am CDT