Understanding the Metrics That Make the Money Roll In
An important part of any business is raising capital. For the first-time entrepreneur, the metrics venture capitalists use to discuss and gauge the value of a business may be unfamiliar, and even intimidating. Being educated about the various terms that may be discussed will reduce stress and keep conversations productive. Andreessen Horowitz compiled a list of 16 Startup Metrics often addressed in finance conversations and during due diligence.
The value of understanding these terms doesn’t stop at the negotiating table. Ultimately, the authors argue, “Good metrics aren’t about raising money from VCs—they’re about running the business in a way where founders know how and why certain things are working (or not)… and can address or adjust accordingly.” Taking the time to learn about these metrics will get you through those awkward early conversations, and translate to a better understanding of your growing business—setting the stage for attracting even more investment in the future.