Top 10 Performance Metrics Investors Want to Know

Venture360’s platform helps thousands of investors all over the world to track the performance of their portfolios.

The equity in private companies isn’t currently traded on an open market (more on that later), so here are the most common metrics investors on Venture360 are using to track and understand overall company performance.

#1 Cash on Hand

Cash is king and how much is left can mean the difference between life and death for a start-up. Savvy investors want to stay on top of this in order to prepare to make some tough decisions on whether to reinvest, start cutting overhead, or cut losses.

#2 Full Time Employees

This is #2 for 2 reasons. First, how many employees is an indication of how much overhead there is to support, and second it is an indicator of growth. If a company is hiring, that is a great thing!

#3 EBITDA

Earnings before interest, taxes, depreciation and amortization. In other words, how much did the company make before the accountants wave their magic wands? This metric is focused on profitability, which is important for the long term viability of the business.

#4 Investment to Date

Investors want to keep a close watch on how much capital has been raised because it’s directly tied to cash flow. Opening a new round? They want to be the first to know.

#5 Gross Revenue

How much has the company sold? According to CB insights, the top reason for failure is building a product that the market didn’t want (42% of the time). The market votes with their dollars.

#6 Net Burn Rate

Every investor understands a company may be losing money now to make money later. That pile of cash recently invested in the last round is evaporating each month, and quick math will tell you how long before it’s gone, which is known as the “Runway.”

#7 Email Subscribers

Subscribers to an email list are a good litmus test of interest in a product or service, and whether it’s growing or contracting can be a sign of how the market feels. This can also be a vanity metric – one that seems to tell a good story but can either be masking a problem or completely manipulated.

#8 New Customer Acquisitions

This is more important as a trend than as a standalone number. As a company grows, it should get better at acquiring new customers. New features are released, the marketing budget grows, and the sales process gets better. All this hard work should be reflected in an upward trend.

#9 Total Paying Customers

Paying customers are important, they show traction and should also be considered as a trend. Keeping a close eye on this metric helps investors understand if they need to be concerned or if the company has it squarely under control.

#10 Contribution Margin

Contribution Margin is a product’s price minus all associated variable costs, resulting in the incremental profit earned for each unit sold. Is the company making money on what it is selling? This number should also go up over time with added efficiencies to the business.


Reporting can be time consuming, which takes people away from their core business. But investors need transparency, particularly when things aren’t going well. The best thing that a company and investor can do is to agree with the reporting requirements up front, which sets the expectations going forward. Venture360 helps founders spend less time preparing their metrics and gives investors a simple way to keep track of their companies.

 

 

 

 

 

LP Sidecars – Not just a third wheel

Opportunities for co-investment are on the rise as limited partners (LP’s) are increasingly drawn to firms that provide direct access to deals for co-investment. These firms are reaping the benefits through additional revenue from sidecar management fees. Since there are benefits on both sides, this type of investment structure is seeing quite the uptick lately.

A sidecar is a co-investment opportunity that is made by an LP alongside a venture fund’s investment. This investment is typically organized and managed by the fund manager. All legal, accounting and due diligence are also performed by the sponsoring fund. Investors have control over which investments to make and how much they commit but without the work typically involved in making direct investments.

Benefits for LP’s

Opportunities for sidecar investments allow LP’s to take a more active role in their portfolio. They can increase their position in deals they view as more attractive and impact the balance in their portfolio in ways that differ from the fund itself. It also gives them the opportunity to be more involved without taking on the full burden of due diligence.

Benefits for Fund Managers

As new funds and investment opportunities pop up all the time, most fund managers are looking for ways to continue to add value to their services. LP Sidecars allow the fund manager to extend additional offerings to investors as they see fit. This could be a new investor, who has only committed a small portion of their capital, or a seasoned investor, who would be well served by the extra attention. The very act of shopping deals to LP’s allows for a more personalized level of interaction and attention.

This can also open up additional revenue sources. Each additional investment brings the opportunity for additional management fees and carried interest, and if done correctly, without any additional work. Hello, win/win!

So what’s holding back fund managers? It all comes down to the administration. The additional complexity quickly breaks their current workflow. Shopping deals through endless email threads is less than ideal. Capital calls now have an additional layer and that excel spreadsheet will need a whole new dimension to provide the right reporting to your LP’s. The additional workload threatens to wipe out any of the benefits.

At Venture360, we’ve been tracking this trend for some time. We built a feature set that allows you to have your own white-labeled LP Portal, where you manage your relationships from shopping deals to reporting metrics. The ease of setting up and managing sidecar investments is just one of the many ways we can simplify your administration duties so you can get out there making money. Want to know more? Visit our website or book a call today.

The new way top companies are raising funding…successfully.

Angels and VCs aren’t the only way to raise capital these days.

In fact, smart companies are exploring ways to engage potential investors who best understand their market and product – THEIR CUSTOMERS!

And you don’t need some online platform charging 5% + of the money YOU raised to make it happen.

WHAT WE DO

?Venture360’s private capital raising platform empowers entrepreneurs with today’s most progressive fund raising techniques.

We know a great way to market to potential investors is through your main website, so we designed a way to simply place a link on your website where potential investors can register to invest in your company.

You control who gets access, and we help manage everything from taking commitments to a fully electronic closing and your cap table.

HOW WE DO IT

Check out LittleHoots and how they use Venture360 to communicate with their customers about investment opportunities:

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We are empowering the companies of tomorrow to raise the money they need today!

NEW! Company profiles (part 1)

This is the first of many updates we will be releasing over the next few weeks enhancing the tools we provide for companies to use in support of the full capital raising life cycle.

This release includes the following:


Companies can make more comprehensive profiles with presentations, LinkedIN integrations for management, and much more.

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Improved file upload experience integrated within applications.

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Discussions now support direct replies with time stamps and varied permissions.

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Round commitments pages now include deal specific information, company financial snapshot and an improved commitments UX.

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All of this information is now presented in a simple, beautiful profile page that can be made public or private by the company.

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What Does Application To Exit Mean?

At Venture360, we are powering the industry from Application to Exit, and that is a very big deal. Here’s why.

We understand making a decision to incorporate a new software system into a business process is a complex and serious one. No one wants to adopt a platform only to realize it doesn’t really do everything you need.  Then you have to move to another system, or worse, have to manage multiple systems at one time.

At Venture360, we never set out to just solve a piece of the puzzle. We want to be the only solution our clients will ever need and continue to deliver the best products in the market at the best prices. Because if it doesn’t do everything – it might as well do nothing.

So, how does one software platform really address everyone’s multi-faceted and complex needs involved in making private investments ranging from the individual in the fund to the angel group to the company?

Well, it all starts with the application.  Our products then don’t stop making life easier until the company exits.

The moment that company hits “Submit” to apply for funding, the entire business process of doing deals is now in motion.

Those applications need to be organized and reviewed. Companies need to be communicated with and additional information is needed. Due diligence files are collected, reviewed, discussions are had, and decisions are made. This may occur between a few fund managers or a few hundred angels. But either way – it is all handled using Venture360’s deal pipeline management.

When a commitment process starts, it isn’t as easy as Bob committing money to go to Mars. It is far more complex when you manage a fund with add-on options and investment vehicles, both special purpose and not. Then there is the family office that co-invests with the Angel group – everyone needs to be kept up to date at the same time. Venture360 makes all of this easy with how we manage everything from the individual to the funding entity to the fund.

Ready to close? We’ve got you covered with an integrated and fully electronic closing. Terms are agreed to, docs are sent for electronic signature requests, money is requested and transferred, then the entire transaction can be verified and recorded.

When the deal is done – the work is done, right? No way – a new process is just starting.

Venture360 now helps you keep track of all of those investments, who did what deal, how they did that deal, how the company is performing, how the fund is performing, and the list goes on…

Venture360 builds this insight into our analytics and reporting features to understand investment history at your fingertips. Performance is critical to understanding future success and data is king.

All investment activity ultimately flows back to the investor for reporting. They want to know where their money went, what they own, how those investments were made, and how they are performing – this information is crucial or they won’t keep investing. Funds and companies live and die by the next fund or round.

This entire process is done all over again and again because our clients are in the business of making investments and making money.

At Venture360, we know the pain points, and we solved them.

That’s what Application to Exit means.

Try our guided tour at Try.Venture360.co