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EIA2016 - Bill Reichert. Startup Financial KPIs: Calculation, Presentation & Interpretation

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EIA2016 - Bill Reichert. Startup Financial KPIs: Calculation, Presentation & Interpretation

  1. 1. The Art of Startup Metrics How to define and manage your success metrics European Innovation Academy July 2016 Bill Reichert @billreichert Managing Director Garage Technology Ventures Capital for Innovation
  2. 2. The Art of Startup Finance
  3. 3. Financial management for startups is not … • Business School finance • Fundraising drill • Marketing metrics The Art of Startup Metrics
  4. 4. Startup Finance is … • Turning your vision into a business – Converting your objectives into quantifiable metrics • Validating and scaling your business The Art of Startup Metrics
  5. 5. Business Model Formula Framework: • We sell [product or service] to [target customers]. • The reason our customers buy our product is [compelling value proposition/benefits]. • We have an advantage over our competition because [sustainable competitive advantage]. • We will become profitable in the [Nth] quarter of [201X] • By selling [XXX] systems/licenses/subscriptions to [YYY] customers • Through a combination of [channels/partners/direct sales] • At $ [price] per system/customer/unit/subscription • With a cost of $ [cost/margin] per customer acquired/product sold. • At that point, our revenue run rate will be $ [revenues] on an annualized basis. Your Business Model Formula
  6. 6. Confidential6 Your Management Dashboard: Key Metrics for your startup company The top seven metrics you need to measure, monitor, and manage The Art of Startup Metrics
  7. 7. What is the Number 1 reason startup companies fail? . . . they run out of cash The Art of Startup Metrics
  8. 8. 1. Cash - What is your Burn Rate? - What is your Net Cash position? - How much Runway do you have? The Art of Startup Metrics
  9. 9. 2. Product - Are you on time, on budget? - How do users rate your features? - Net Promoter Score The Art of Startup Metrics
  10. 10. The Art of Startup Metrics Net Promoter Score:
  11. 11. 3. Marketing - Qualified Leads? - Validation of Core Value Proposition - Validation of Marketing Channels - “Viral” coefficient - Cost per qualified lead? The Art of Startup Metrics
  12. 12. 4. Sales - Sales force/rep Productivity? - Sales Cycle (offline)? - Conversion rate (online)? The Art of Startup Metrics
  13. 13. 5. Customers - Growth rate of customer base? - Customer Acquisition Cost (CAC)? - Customer Lifetime Value (CLV/CAC)? - Profitability (CLV/CAC)? The Art of Startup Metrics
  14. 14. 6. Support - Customer satisfaction/engagement? - Customer churn? The Art of Startup Metrics
  15. 15. 7. Team - Alignment and morale? - Performance and skills? - Recruiting and retention rates? The Art of Startup Metrics
  16. 16. CustomersCash Team Product Marketing Sales Support Startup Management Dashboard The Art of Startup Metrics
  17. 17. Confidential17 The Art of Startup Metrics
  18. 18. Confidential18 The Art of Startup Metrics
  19. 19. Confidential19 The Art of Startup Metrics
  20. 20. Confidential20 The Art of Startup Metrics Objectives, Deliverables, Metrics
  21. 21. Other Metrics: • Price: How do you test price/value assumptions? • Costs: Do you have alternative cost models? • Competition: Can you measure market share? • Channels: Profitability of alternate channels? • Revenue streams: Assumptions vs. reality? • Operations: Manufacturing, distribution, etc.? • Others? … The Art of Startup Metrics
  22. 22. Building and Using your Management Dashboard: • Simple: The best is the enemy of the good • Open: Templates and investment create tunnel vision • Meaningful: Monitor metrics that really matter • Flexible: Drop metrics that outlive their usefulness • Accountable: Each metric must have an owner. The Art of Startup Metrics
  23. 23. Final Note: Monthly Management Reports • Standardize early: Produce monthly financials, dashboard summary, and key action items • Board package: Company driven, not investor driven; but solicit investor input • Tools vs. Grades: Focus on learning and responding, not grading and punishing. The Art of Startup Metrics
  24. 24. The Art of Startup Finance Online course at Kauffman Founders School Resources for Entrepreneurs http://www.entrepreneurship.org/Founders-School/The-Art-of-Startup-Finance.aspx
  25. 25. Art of the Start Online course at Skillshare.com Resources for Entrepreneurs
  26. 26. For questions, comments, or slides reichert@garage.com @billreichert R E S O U R C E S F O R E N T R E P R E N E U R S . Garage website: http://www.garage.com w w w . g a r a g e . c o m https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcRZ7w8fVmbt6es1ZxqeOI57Edm4- raGru60faW6mw52Inz9FfT1og https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcRZ7w8fVmbt6es1ZxqeOI57Edm4- raGru60faW6mw52Inz9FfT1og The Art of Startup Metrics
  27. 27. The Art of Startup Metrics Bill Reichert Managing Director Garage Technology Ventures Capital for Innovation

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