Think Quarterly Growth Numbers for Investors

Investors love to talk about certain revenue minimums before they’ll consider investing (e.g. $1 million and $5 million are the most common thresholds). In reality, what they really want is a story that shows scalable growth. Let’s look at two examples:

Company A

  • Startup has been in business for four years
  • Added $50,000 in new recurring revenue last quarter across 50 new customers
  • Just hit $1,000,000 in annual recurring revenue last quarter

Company B

  • Startup has been in business for three years
  • Added $250,000 in new annual recurring revenue last quarter across 100 new customers
  • Just hit $500,000 in annual recurring revenue last quarter

Which one is more valuable? Which one will attract more attention from investors? If you hear the message about requiring a million in revenue to garner investor interest, then it appears Company A will be most desirable. Actually, Company B is much more desirable, even with half the annual recurring revenue. Company B is adding more customers at a much higher average customer value in the same period of time. Investors want to see the customer acquisition machine working and Company B clearly has it humming.

What else? What are some other thoughts on telling a story with quarterly growth numbers?

One thought on “Think Quarterly Growth Numbers for Investors

  1. Other key data points are customer/staff retention, revenue longevity, performance of accounts, size/growth of industry, and growth in revenue of existing accounts. Without this info, I would be hesitant to decide on A or B.

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