The Value of LTV:CAC

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

The Lifetime Value to Cost of Customer Acquisition ratio is called LTV:CAC and is a useful ratio in determining the health of a startup.

To calculate the Lifetime value, take the monthly revenue and divide by the churn rate.

To calculate the Cost of Customer Acquisition, take the number of new customers for a month and divide by the cost of sales and marketing for that month.

Compare the LTV to CAC to determine the ratio.

The ratio must be at least 3:1 to prove the business viable.

The higher the LTV:CAC, the higher the gross margins and profit margins.

This provides a greater reinvestment rate into the business.

Investors place a higher valuation on startups with higher LTV:CAC ratios.

SaaS businesses often have a 5:1 LTV:CAC, which comes from the recurring revenue.

SaaS businesses at the Series A level often have a 7:1 LTV:CAC.

The higher the multiple, the higher the growth rate for the company.

Check the LTV:CAC rate of a startup to determine its growth prospects.

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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When To Sell Your Business

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

Startup founders receive buyout offers throughout the life of the business.

Even in the early days of the startup, they have the opportunity to sell the company.

At each round of funding, the founder has the choice to raise more funding or sell it.

Here's a list of reasons to sell the business:

The founder no longer wants to run or own the business.

The business no longer appears to have a future due to changes in the market or competition.

The offer is outsized in valuation due to unusual circumstances.

There's a strategic reason for selling the business that furthers the founders and investors goals.

The founder should consult the investors before selling.

In some cases, it may be better to shut down the business rather than sell it.

Selling the business takes time and preparation to do it properly.

Consider these points in deciding to sell your 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.

_________________________________________________________

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

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The Challenge of Regulation

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

Regulation by the government of an industry is meant to protect customers and provide a level playing field for the companies.

The downside to regulation is that it inhibits innovation.

It often favors the incumbents in an industry and makes it difficult for startups to succeed.

It makes market entry for new players more expensive.

The existing players form advocacy groups that lobby the government for their point of view.

Regulation often snuffs out competition for the existing players.

It keeps costs high, which limits the number of users in the space.

It prevents new innovations that the incumbents may not want to adopt since it would come at a high cost.

Some industries move abroad to find acceptance for the new technology, citing the challenges in the US.

In short, regulation drives the cost up and the innovation down.

As an investor in startups, consider the regulatory environment before investing in a particular industry.

Understand the impact of regulation on the startup's growth prospects.

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.

_________________________________________________________

Thank you for joining your host Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

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/
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How To Monitor Your Sales Forecast

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

Forecasting revenue is an important skill because investors want visibility into it.

To forecast better, use the Trailing Four Months model.

In this model, calculate the growth rate by taking the average of the growth rate over the last four months.

Use this growth rate to forecast the remainder of the year.

Do the same for burn rate.

Set up a spreadsheet that calculates this automatically at the end of each month.

This will give you an ongoing estimate for the year.

It compares sales and burn.

This takes the guesswork out of forecasting and gives the investors a data-driven forecast.

Knowing where the company stands is important in making decisions.

Share this model with investors so they can track your progress.

Monitor your sales forecast with the trailing four-month model to understand where the company stands.

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.

_______________________________________________________

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

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In this episode of Investor Connect, Hall T. Martin welcomes Mike Sloan, the founder and CEO of Simple Labs. Mike introduces the audience to Cogni, a ground-breaking device designed to address some of the major challenges in the wine and spirits industry, such as product loss due to evaporation and spoilage. With real-time monitoring, Cogni provides distilleries and wineries valuable insights, allowing them to better manage their product quality and significantly increase their return on investment.

Mike emphasizes the importance of continuous barrel monitoring and how Cogni's integration of ML and AI technologies offers unprecedented data visibility and efficiency. Already conducting beta tests and receiving positive industry feedback, Simple Labs aims to launch in the bourbon and wine markets, with expansion plans to service a global market.

With strong financials, a dedicated team, and a pipeline of potential clients, Simple Labs is poised to disrupt and innovate within this traditional sector. Tune in to learn more about Mike's journey, the technology behind Cogni, and the promising future of Simple Labs in optimizing the wine and spirits production process.

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

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Mistakes in Scaling the Startup

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

The seed stage grows the business from 0 to $1M.

The growth stage grows from $1M to $10M.

The scaling stage grows from $10M to $100M.

Here are the most common mistakes founders make at the scaling stage:

They stop working on sales to focus on other areas of the business.

The founder can never stop working on sales.

They fail to control the burn.

The burn rate must be managed throughout the life of the business.

They fail to keep up with the competition.

The competition will continually challenge the startup, and it must be managed.

They look to hire "rock star" players.

These rarely work out in the long run, as they often don't fit the culture.

Failing to keep up with the product.

As the company grows, the product continues to grow so it's important for the founder to keep up with it.

Overestimating sales capacity.

Founders often overestimate how much the team can manage.

Reaching for the upmarket.

Startups often try to move upmarket to gain a higher dollar sale per customer.

Doing this at the expense of the core business is detrimental.

Consider these mistakes in scaling the startup.

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.

_______________________________________________________

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

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Investors Look for Execution, Not Ideas

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

Startup founders often believe their idea will carry the day with the investor.

They propose their idea to spark interest.

While that may be a good way to get attention, it will certainly not maintain it for long.

Investors look for execution, not ideas.

In raising funding, investors look for momentum and traction in the deal.

They will look for evidence of execution in sales, team, product, and fundraising.

These are the four core areas in which execution lives in a startup.

Consider your efforts in those areas in crafting an update to the prospective investor.

Showcase that story over a period of time, as execution occurs over time and not in a single moment.

Having an idea is interesting.

Understanding the customer problem and knowing the domain is helpful.

Having a key insight is useful.

Showing execution in a consistent manner is the winning ticket for gaining investor attention and interest.

Consider these points in pursuing funding from investors.

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.

_______________________________________________________

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

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Lessons From Napoleon for the Startup

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

Napoleon never ran a startup, but his life provides many lessons for the startup founder.

Here are some lessons to take away from his life:

Underestimating risk -- Napoleon underestimated the harshness of the Russian winter and suffered great losses.

The startup should consider carefully the market to pursue before investing substantial resources.

Overconfidence -- Napoleon grew overconfident from his past successes.

The startup should consider each opportunity as a new way to succeed or fail.

Failure to adapt -- Napoleon refused to modify his traditional plan and suffered losses for it.

The startup should adapt to the market conditions and make changes to optimize the team for each stage.

Failing to take timing into account -- Napoleon refused to retreat from the Russian campaign and suffered for it.

The startup should ask if now is the right time to pursue a market.

Overextending -- Napoleon overextended himself in attacking Russia.

The startup founder should consider focusing resources on a few key priorities and not spread out over too many.

Consider the fate of Napoleon and his attack on Russia as a series of lessons for your startup.

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.

_______________________________________________________

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

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For Investors check out: https://tencapital.group/investor-landing/
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