Beauty or Witch?
Take a close look at this picture.
Do you see a young lady or do you see an old lady (that looks a little menacing)?
Studies done on this famous optical illusion have shown that most people see the young lady first, and only see the old lady on closer scrutiny.
Assessing the Viability of Investment Opportunities
Many startups think that investors will come chasing after them after hearing their amazing pitch.
Investors receive hundreds, if not thousands of pitches a month. Having only a good story won't even get you close to the door.
As a founder, you need to know what numbers investors are looking out for to know if you have a game plan to be profitable...
...you are actually a witch masquerading as a beauty.
Do You Know the Key Indicators of Profitability?
When startups come to us to pitch their ideas, the first set of indicators we look out for is the expected Lifetime Value (LTV) of the Customer and the Cost of Customer Acquisition (CAC).
In layman's term, Lifetime Value of the Customer refers to the average amount that the business will make from each customer over the period of their relationship. The Cost of Customer Acquisition refers to the amount that the business will spend to acquire each new customer.
As a rule of thumb, the business is likely to be profitable if the ratio of
LTV/CAC is >3.
Of course the ratio is not the only indicator, but this alone tells a lot!