Startup Metrics: How to Attract Investors

Investors guide

Getting Angels and VCs now is easier than ever. What matters is you promise them returns. If that’s not the case, you will find it hard to pass this phase.

So what would you do when seeking funds for your venture? Would you choose your own metrics for gauging startup potential? Would you rather focus what metrics are important from the Investor’s point of view? Your key metrics are bound to change depending on how much time you spend and survive in the market. I would suggest initially to go with what Investors would be happy with.

So let’s hear out what the metrics that are most important for the Investors.

Metrics for seed funding

While an investor considers you in the seed round, he has his scales to measure how far he can gob with you. He would consider whether you ship product, you have users or customers, whether the product or service or app is user-friendly or not, the number of active customers, etc. He would also want good customer retention, a positive or at least promising to be positive in future cash flow.

The most important thing an Investor would seek in your startup is the growth. So an investor would also like to know about the working, scalable, and profitable channels. He wants something that is sustainable and has the potential for growth. He would access whether your business has any possibilities of getting more investors or acquisitions in future. Lastly, he would also think about the compatibility of the founder with him.

How much growth can convince an investor?

The amount of growth that can convince an investor to fund your startup depends a lot on the type of your business. The best metric here could be your MoM organic growth. Works for a lot of them. Customer Retention, Referrals, and Churnings would also be considered. Generally, 20-50 percent of MoM growth is seen as positive.

Cost Projections

At initial levels, cost projections of a startup are more important than the revenue it generates. Investors know that you aren’t making millions but revenue is going to be unpredictable. What they value more are the costs. Investors invest more on the qualities and capabilities of the team and less on the market feasibility.

Also Read: Fresh And Unique Ways Of Bootstrapping Your Startup

Growth versus Profit

It’s a known fact that a startup can be sustainable only if it has a product fit according to the market and people are happy to have it. When at initial stages, growth and not profit must be the priority for any startup. As long as you don’t run out of funds to run your venture, your are better even with negative revenues if you can still manage to grow at a positive rate.

Product Metrics

Coming to what investors expect from a product, they want a product that people love to have. Once they get a product that people are totally in love with, they don’t hesitate to put their money. For an app to be their choice, its needs to have the potential to be present on the home screen of the smartphones of people. That’s what measures how promising your product is.

User Experience

This could be the biggest metric to measure the potential of a startup. Like, for instance, Facebook emerged sustained and still is the biggest player because it provided a user experience that no one else could. If done that, you don’t even need any other marketing initiatives. You would have Word of Mouth marketing by your side and getting, and investor won’t be a big deal. So today if you have only a single customer, make sure he is totally content and happy with your services.

So these were the metrics that are important for investors? Once you have scaled and are on the track of growth, your metrics would definitely change, but when seeking investments, these are the things that can help you.