Using Metrics in Your Valuation

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

Metrics can help drive the valuation for your startup fundraise.

Here is a list of key metrics to include:

Number of visitors to your website and their conversion to paying customers. The higher the conversion rate, the lower the cost of sales and the greater the valuation.

Average revenue per customer. The higher the average revenue, the easier it will be to achieve scale.

Monthly or annual recurring revenue. This is the key driver for calculating forward multiples of a valuation.

Revenue run rate. If your revenue is still ramping up, consider taking the current monthly revenue and multiplying it by 12 to give you an annualized revenue run rate.  

This will make your annualized revenue bigger than a look-back method.

Contribution margin. If you have high gross margins, include this in your valuation calculation as this will translate into more dollars going back into the business.

Customer acquisition vs. lifetime value. This ratio should be at least 1:3, but if it’s 1:5 or better, it can improve your valuation.

Churn rate. This is the rate at which customers stop using your product or service. The lower the rate, the better the valuation.

Viral coefficient. This measures how fast your product moves from one customer to the next through referrals. A highly viral product will garner a much higher valuation.


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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For more episodes from Investor Connect, please visit the site at: http://investorconnect.org 

Check out our other podcasts here: https://investorconnect.org/ 
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On this episode of Investor Connect, Hall welcomes Henry Lopez, Managing Partner at Levante Business Group, and Host of the How of Business podcast.

Levante Business Group provides business consulting and services and is the producer of the How of Business podcast.

The How of Business is a weekly show for aspiring entrepreneurs and existing small business owners. If you are looking for actionable advice, tips, and techniques on how to start, run and grow your small business, this is the podcast for you! In each episode, they either discuss a business topic or interview an existing business owner or business service provider. 

The podcast reaches an engaged audience of aspiring entrepreneurs and existing small business owners worldwide. Their popular and top-rated business podcast averages over 72,000 unique monthly downloads, 774,000 unique downloads in 2020, and over 2,200,000 all-time downloads.

Henry is a serial entrepreneur, small business coach, and consultant. He has over 35 years of diverse business experience, including successful careers in the information technology industry, sales, sales training, and business ownership. 

Henry has been involved in 12 different businesses since buying his first business in 1991. Henry has bought and sold businesses and has also developed his own new businesses, including franchises. His businesses span various industries including restaurants, real estate investments, salon suites, software, travel, shared office space and coworking, car washing, and small business coaching and consulting. Henry currently resides in Jensen Beach, Florida with his wife Pam.

Henry speaks about the great resignation, remote work, online sources of information that he finds useful, tips for a successful podcast, what business he would start tomorrow, and much more.

Visit Levante Business Group at www.linkedin.com/company/levante-business-group and listen to the How of Business podcast at www.thehowofbusiness.com/how-of-business-podcast/. 

Reach out to Henry at henry@levantebg.com, on LinkedIn at www.linkedin.com/in/henry-lopez-9758524/, and on Twitter at www.twitter.com/HenryLuvsBiz. 

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For more episodes from Investor Connect, please visit the site at: http://investorconnect.org  

Check out our other podcasts here: https://investorconnect.org/ 
For Investors check out: https://tencapital.group/investor-landing/ 
For Startups check out: https://tencapital.group/company-landing/ 
For eGuides check out: https://tencapital.group/education/ 
For upcoming Events, check out https://tencapital.group/events/  

For Feedback please contact info@tencapital.group   

Please follow, share, and leave a review.

Music courtesy of Bensound.