In the second half of our workshop, we covered:
- start-up metrics
- ways to finance your start-up
Our next work with Professor Tim Kastelle is on Next Monday! Looking forward to seeing everyone.
2. What are Metrics?
⢠A type of measurement used to quantifiably
gauge performance.
⢠Any business data that is collected and
analysed periodically.
Š IDEA Network 2013
3. Metrics in Business
⢠In business, metrics include:
o Return of Investment (ROI)
o Sales revenues
o Expenditures
o Customer loyalty and retention
o Operating productivity etc.
⢠Used to help make strategic business
decisions.
Š IDEA Network 2013
4. The Problem
⢠Metrics used in large business are not useful
or effective at gauging start-up performance.
⢠This is because start-ups require different
information, at more frequent intervals to
make rapid changes if needed.
⢠The context in which the information is used
is also different.
Š IDEA Network 2013
5. Start-ups vs large Companies
⢠These problems exist because there are
significant differences between what a Start-up
is and what a large company is.
⢠Specifically objectives and priorities.
⢠Therefore the required information to make
strategic decisions is completely different.
Š IDEA Network 2013
6. Focus of Start-ups
⢠Start-ups are still figuring out a business
model to adopt.
⢠Capabilities
o Management/Staff Talent
o Execution Capabilities
⢠Revenues
o New customer growth/customer retention
o Price optimisation
Š IDEA Network 2013
7.
8. Focus of Large Companies
⢠Operating margins
o Development/Production Efficiency
o Logistic Efficiencies
o Customer Interaction Efficiency
⢠Asset Efficiency
o Inventory Efficiency
o Receivable and Payables Efficiency
Š IDEA Network 2013
9.
10. Start-up Metrics vs Accounting
⢠Start-up metrics provide information that is
generally provided by accounting
departments of large companies.
⢠These metrics also simultaneously represent
company performance.
⢠The metrics then gradually change as the
start up transitions into a large company.
Š IDEA Network 2013
11. Another problem.
Š IDEA Network 2013
⢠You can collect data about anything.
⢠There are a large number of tools that can be
utilised to gather tremendous amounts of
data about your company.
⢠Essentially, the problem is information
overload.
12. What makes a useful metric?
Š IDEA Network 2013
⢠Firstly, one that answers an important
question. metrics are most often paired with
questions for this reason.
⢠One that enables clear goal creation and
progress feedback.
⢠One that focuses the entire company.
13.
14. What makes a useful metric?
Š IDEA Network 2013
⢠One that is a ratio instead of a cumulative
value (time inclusive). New users per year
instead of total users.
⢠Provides a percentage value of change
periodically. Revenue increased 2%
compared to this time last month.
⢠One that is easy to understand.
15. Important Metrics for Start-ups
Š IDEA Network 2013
⢠Metrics that represent:
o Distribution
o Engagement
o Revenue
16. Distribution
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⢠New users added last month, last six month growth rate: How
are well are we growing the user base?
⢠Total user base, last six month growth rate: How important is our
monthly growth compared to our total user base?
⢠Cost of customer acquisition, lifetime value, pay back
period: Can we grow faster through paid acquisition? Are we
acquiring customers profitably? How much can we afford to spend
on new customers? How is this changing over time?
17. Engagement
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⢠Active users, growth rate: Are we getting better at
giving our customers what they want/need?
⢠% of users using top 3 key features in a given
month: Are our product initiatives the right ones?
18. Revenue
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⢠Revenue , Last six month revenue growth: Are we growing our
revenue?
⢠Conversion to paid rate in that month/by cohort: How many
users converted to paid? Are we improving our ability to convert
customers to paid?
⢠Average spend per paying customer vs solo account: What is
the impact of the account management team?
⢠Last month churn rate, Last six month churn rate: How well do
we retain our customers?
⢠Burn rate: When are we profitable? When do we run out of cash?
When do we need to raise?
21. Before we beginâŚ
Starting a business is a big commitment, not just financial:
- your time
- your energy
- your team
So, have an exit in mind before you start:
- how long am I in this for?
- why am I doing this?
- what level of risk am I comfortable with?
Š IDEA Network 2013
32. 1) Seed Funds
- grant-funding
- university seed funds
- friends and family
- angel investors
- (venture capital)
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33. 2) Seed Incubators
- seed funding + mentorship
- 3 months program
- launch event
- usually $20K for you to launch your prototype, validate
and gain traction
Š IDEA Network 2013
34. 3) Angel Investors
- HNW individuals
- successful entrepreneurs and technologists
- work individually and invest their own money
35. 4) Venture Capitalists
- can exist in every stage of the start-up cycle (seed, early
stage, growth)
- professionally managed team
- invests for 3-5 yrs into a start-up
- experience, contacts
*crucial during exit/sell stage*
- stuck in a business for 3+ years
- less control over business
- VCs have an exit timeline
Š IDEA Network 2013
38. Thank You
⢠This Week:
o Jobs Movie at Southbank Cineplex starting 12:30pm
on Sunday.
o Registration for UQU Entrepreneurial Competition will
open.
⢠Next Week:
o 09-211 Professor Tim Kastelle, 6pm, Monday 2nd
September. Lean Startup and Business Models