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When you’re talking to any investor, angel or otherwise, you need to be able to tell a story about your business and support it with meaningful metrics. Without those metrics, the story lacks substance, direction, and credibility. So how do you know which metrics are meaningful, both in measuring your own business and presenting to investors?
Understand What Traction Means For You
Ultimately, the metrics that matter most to your story are the ones that show your traction in the market. Before you pick which ones seem most appealing or readily available, ask yourself a few key questions:
· What is your market and what does it look like?
· What pain point are you trying to solve?
· What behavior are you trying to change?
· Who is your ideal customer?
· How does he/she use your product?
When you have concrete answers to these questions, you can determine which metrics are nice to have, and which are critical to successfully telling you story to investors.
Still, There Are Several Metrics Angels Look For
It’s up to you how you use them in your pitch or in conversation, but you should know them in order to directly and effectively answer questions.
Product Usage (Month over Month)
· Time Users Spend Using Product
· Organic Growth
· How Much Usage and Growth Comes from Referrals
· How Much Product Usage is Repeat Usage
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Customer Growth
· Number of Non-Paying vs. Paying Customers
· Conversion Rate of Non-Paying Customers to Paying Customers
· Total Number Customers
· Number of Customers Month over Month
· Growth Rate (total, annual, and month over month)
· Lifetime Value
· Cost of Acquisition
Partner Growth (Month Over Month)
Depending on what your business does, you can use this in addition to customer growth, as a substitute for customer growth, or it exclude it altogether from your data.
Revenue Growth
*The goal here is to show clear trend lines
· Total Revenue Month Over Month
· Total Revenue Quarter Over Quarter
· Total Revenue Year Over Year
Chances are many of these metrics are crucial to your story. However, don’t forget about the metrics that relate to your core business. Just because investors don’t know to ask for them doesn’t mean they aren’t critical to your success.
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About Hyde Park Angels
Hyde Park Angels is the largest and most active angel group in the Midwest. With a membership of over 100 successful entrepreneurs, executives, and venture capitalists, the organization prides itself on providing critical strategic expertise to entrepreneurs and the entrepreneurial community. By leveraging the members’ deep and broad knowledge of multiple industries and financial capital, Hyde Park Angels has driven multiple exits and invested millions of dollars in over 40 portfolio companies that have created over 850 jobs in the Midwest since 2006.
About the Authors
Alida Miranda-Wolff
Alida Miranda-Wolff is Associate Manager at Hyde Park Angels. Her role includes creating and executing marketing and communications strategies, planning and managing events, fostering and maintaining community and industry partnerships, and managing membership. Prior to joining Hyde Park Angels, Alida served as a manager, data analyst, and publication specialist at a multibillion dollar industrial supply corporation. She has led two of the most successful Kickstarter campaigns in Chicago history and worked with half a dozen startups in various marketing, content creation, and project management roles. Alida believes in creating valuable, spreadable multimedia content, and has done so as a freelance writer for several print and online publications.
Pete Wilkins
Over the past two decades, Peter has successfully founded, built, and turned around companies in the education, healthcare, and technology industries. He has also leveraged his entrepreneurial experience to help build one of the largest and most successful angel investor groups in the country.
Peter currently leads Hyde Park Angels (HPA) as the managing director. Prior to HPA, he co-founded New Futuro, a socially innovative education company helping Latino families get their students into college. Before New Futuro, Peter worked with KKR Capstone (KKR’s operations group) as President of PRIMEDIA Healthcare, where he turned around the company from record losses to record profits and built one of the premier online physician education communities. Prior to PRIMEDIA, Peter successfully served in senior sales and marketing roles for two technology startups that collectively sold for more than $2.8 billion. Peter holds a degree in business from Indiana University and graduated from the University of Chicago Booth Executive Institute.
Peter is passionate about inspiring and developing current and future startup leaders. He believes when entrepreneurs lead with purpose as their best-selves they improve their lives, their companies, and the world in incredible ways. Peter serves on a number of company, venture capital and non-profit boards and is an active advisor to many entrepreneurs. He also frequently speaks about entrepreneurship, as well as providing tailored solutions to executives and companies through the Omaxen Group.
