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Securing funding from a knowledgeable and generous venture capitalist is the dream of many a startup business owner. Actually making that deal happens very rarely in the real world. There are millions of new businesses each year and only a finite amount of VC funds. If you are hoping to woo some VC funding soon, the key is proving that your company stands out among all the rest. They will want to see numbers that confirm your claims of being a company with huge growth potential.

One of the first things venture capital investors will want to see is your rate of monthly recurring revenue (MRR). This is how fast your revenue is increasing every month. A high rate – like 20 percent – demonstrates that your firm is taking hold on the market, with sales volume about to explode.

VCs will also want to look at your customer turnover rate, also known as the churn rate. This is the amount of customers that terminate services with your company during a given time. Venture capitalists get nervous when they see a churn rate above 10 percent.

Another hard number VCs will want to see is your gross margin. This is how much money is left over from sales after accounting for all costs associated with producing your product or service. The higher the gross margin, the better as it indicates a company that is growing quickly and set to make major profits.

Finally, be prepared to show the value of each customer in dollar amounts. How much money does each customer contribute to your company? By figuring this out, VCs can then determine the lifetime value of your clients – a prediction of the net profit brought in during the course of an entire relationship with a customer. If the lifetime value of each customer is high than your company has probably found its sweet spot in the market.

If your business is lacking in any of these metrics, take a close look at your company and fix the problems before approaching venture capital investors for funding.


Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
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