In the second half of our workshop, we covered: - start-up metrics - ways to finance your start-up Our next work with Professor Tim Kastelle is on Next Monday! Looking forward to seeing everyone.

1. Start-up Metrics

2. What are Metrics?
• A type of measurement used to quantifiably
gauge performance.
• Any business data that is collected and
analysed periodically.
© IDEA Network 2013

3. Metrics in Business
• In business, metrics include:
o Return of Investment (ROI)
o Sales revenues
o Expenditures
o Customer loyalty and retention
o Operating productivity etc.
• Used to help make strategic business
decisions.
© IDEA Network 2013

4. The Problem
• Metrics used in large business are not useful
or effective at gauging start-up performance.
• This is because start-ups require different
information, at more frequent intervals to
make rapid changes if needed.
• The context in which the information is used
is also different.
© IDEA Network 2013

5. Start-ups vs large Companies
• These problems exist because there are
significant differences between what a Start-up
is and what a large company is.
• Specifically objectives and priorities.
• Therefore the required information to make
strategic decisions is completely different.
© IDEA Network 2013

6. Focus of Start-ups
• Start-ups are still figuring out a business
model to adopt.
• Capabilities
o Management/Staff Talent
o Execution Capabilities
• Revenues
o New customer growth/customer retention
o Price optimisation
© IDEA Network 2013

8. Focus of Large Companies
• Operating margins
o Development/Production Efficiency
o Logistic Efficiencies
o Customer Interaction Efficiency
• Asset Efficiency
o Inventory Efficiency
o Receivable and Payables Efficiency
© IDEA Network 2013

10. Start-up Metrics vs Accounting
• Start-up metrics provide information that is
generally provided by accounting
departments of large companies.
• These metrics also simultaneously represent
company performance.
• The metrics then gradually change as the
start up transitions into a large company.
© IDEA Network 2013

11. Another problem.
© IDEA Network 2013
• You can collect data about anything.
• There are a large number of tools that can be
utilised to gather tremendous amounts of
data about your company.
• Essentially, the problem is information
overload.

12. What makes a useful metric?
© IDEA Network 2013
• Firstly, one that answers an important
question. metrics are most often paired with
questions for this reason.
• One that enables clear goal creation and
progress feedback.
• One that focuses the entire company.

14. What makes a useful metric?
© IDEA Network 2013
• One that is a ratio instead of a cumulative
value (time inclusive). New users per year
instead of total users.
• Provides a percentage value of change
periodically. Revenue increased 2%
compared to this time last month.
• One that is easy to understand.

15. Important Metrics for Start-ups
© IDEA Network 2013
• Metrics that represent:
o Distribution
o Engagement
o Revenue

16. Distribution
© IDEA Network 2013
• New users added last month, last six month growth rate: How
are well are we growing the user base?
• Total user base, last six month growth rate: How important is our
monthly growth compared to our total user base?
• Cost of customer acquisition, lifetime value, pay back
period: Can we grow faster through paid acquisition? Are we
acquiring customers profitably? How much can we afford to spend
on new customers? How is this changing over time?

17. Engagement
© IDEA Network 2013
• Active users, growth rate: Are we getting better at
giving our customers what they want/need?
• % of users using top 3 key features in a given
month: Are our product initiatives the right ones?

18. Revenue
© IDEA Network 2013
• Revenue , Last six month revenue growth: Are we growing our
revenue?
• Conversion to paid rate in that month/by cohort: How many
users converted to paid? Are we improving our ability to convert
customers to paid?
• Average spend per paying customer vs solo account: What is
the impact of the account management team?
• Last month churn rate, Last six month churn rate: How well do
we retain our customers?
• Burn rate: When are we profitable? When do we run out of cash?
When do we need to raise?

19. Useful Links
© IDEA Network 2013
• http://blog.kissmetrics.com/single-startup-metric/
• http://tomtunguz.com/your-startups-10-most-important-metrics
• http://www.forbes.com/sites/dailymuse/2013/04/18/3-metrics-that-
really-matter-for-your-start-up/
• http://www.jagannemani.com/2011/11/29/why-innovation-metrics-
need-to-be-different-from-other-business-metrics/
• http://www.slideshare.net/andreasklinger/metrics-for-early-stage-
startups
• http://www.slideshare.net/sblank/why-accountants-dont-run-
startups-041410?from_search=16

20. Ways to Finance your
Start-up

21. Before we begin…
Starting a business is a big commitment, not just financial:
- your time
- your energy
- your team
So, have an exit in mind before you start:
- how long am I in this for?
- why am I doing this?
- what level of risk am I comfortable with?
© IDEA Network 2013

22. The Start-up Funding Path...
© IDEA Network 2013

23. Non-equity Financing
1) Crowdfunding
2) Bootstrapping
3) Loan (Debt)
© IDEA Network 2013

24. 1) Crowdfunding
Individuals provide monetary support to start-ups who put
their ideas online.
© IDEA Network 2013

27. 2) Bootstrapping
- Moore’s law
- Psychological kick (effective money spending)
- Business decision freedom
- Easy exit options
- Cashflows are a must…
- Investment constraint (opportunities missed)
- Time restraint
© IDEA Network 2013

30. 3) Loan (Debt)
- family & friends
- bank
- KIVA, etc.
- limited funds
- banks need predictability and knowledge
- Bankruptcy
© IDEA Network 2013

31. Equity Financing
1) Seed funds
2) Seed incubators
3) Angel investors
4) Venture Capitalists
…………………………………………………………………….
5) Pre-IPO/buyout
6) Private Equity
© IDEA Network 2013

32. 1) Seed Funds
- grant-funding
- university seed funds
- friends and family
- angel investors
- (venture capital)
© IDEA Network 2013

33. 2) Seed Incubators
- seed funding + mentorship
- 3 months program
- launch event
- usually $20K for you to launch your prototype, validate
and gain traction
© IDEA Network 2013

34. 3) Angel Investors
- HNW individuals
- successful entrepreneurs and technologists
- work individually and invest their own money

35. 4) Venture Capitalists
- can exist in every stage of the start-up cycle (seed, early
stage, growth)
- professionally managed team
- invests for 3-5 yrs into a start-up
- experience, contacts
*crucial during exit/sell stage*
- stuck in a business for 3+ years
- less control over business
- VCs have an exit timeline
© IDEA Network 2013

37. Question Time

38. Thank You
• This Week:
o Jobs Movie at Southbank Cineplex starting 12:30pm
on Sunday.
o Registration for UQU Entrepreneurial Competition will
open.
• Next Week:
o 09-211 Professor Tim Kastelle, 6pm, Monday 2nd
September. Lean Startup and Business Models