Tomasz Tunguz Finance Metrics
Tomasz Tunguz, Venture Capitalist at Repoint Ventures, has 10 metrics he values most when combing through a startup’s model.You can read the original post here.
"Financial statements are a Rosetta Stone for startups. They reveal the strategies and the tactics of how to bring a product to market."
Tomasz Tunguz - Redpoint Ventures
How quickly a company can grow under their current conditions. Indicates the potential of a business.
The bottom line or burn rate. Dictates the minimum amount a company needs to raise to become profitable.
Profit per unit without fixed costs. You can calculate the Contribution Margin by taking the revenue from one unit and subtracting the variable costs.
A gauge for how aggressive a company can be marketing and selling its services. The longer the payback period, the greater the risk for churn.
A way to quantify the revenue potential for each customer. Publicly traded SaaS companies average a ~3% churn rate.
The largest expense for most startups. An easy way to gauge salaries to market rates and employee retention.
Indicates how easily the product is sold and how well the sales team is run.
A measure of how expensive it is to make a product. Calculated by taking revenue and subtracting COGS.
Non-Personnel Marketing Spend
The most significant controllable expense in a business. It typically includes ad spending and event spending.
Revenue per Employee
Revenue per employee is a measure of how efficient a business is in using technology to bring their product to market.