Your portfolio companies are all different. Some are pivoting, others are growing and yet a few are undergoing management changes. How can you help them where they need it?
Track the metrics. Assume we’ve invested in a promising SaaS business. Finally, the product is starting to witness some uptake and our cashflow deficit seems to narrow each month. You have two options – pick-up the pace of customer acquisition or rake in the profitability. What will you advise your founders?
If your response is “it depends”, you’re absolutely right. Let’s take a look at the unit economics:
Customer Acquisition Cost: $5,000
Lifetime Value: $10,000
Monthly Churn: 3.5%
The LTV : CAC ratio here is just 2x. From the above numbers, the monthly churn rate appears to be a tad too high. Let’s bring it down to say, 2% so our LTV:CAC ratio improves enough to step on the on customer acquisitions.
Simple enough analysis there, but almost impossible if we work only with lagging indicators of success such as revenue and EBITDA. Each business will have it’s own key metrics to track and chances are that you’re already tracking a few metrics in your head or on a spreadsheet. But as you may already realize, no data equals no analysis. How can we make it smooth for our portfolio companies to submit these metrics to us?
Presenting the portfolio metrics add-in for Excel that helps portfolio companies easily submit metrics against your deliverables without leaving the comfort of their spreadsheets. Check it out on the Office Store.