Investors like to remove unnecessary risks and not invest at the stage of idea, concept, or scientific development when the demand for the product in the market has yet to be apparent and there are no users. Minimal metrics, when there is no significant data to study yet, start with the so-called «pirate metrics»:
Acquisition (customer acquisition) — users come from different channels.
Activation (customer activation) — people like the first visit: a "happy experience".
Retention (customer retention) — is one of the most important metrics. Users return and visit the service several times. If users don't come back to use the product, no one is interested and doesn't need the product.
Referral (customer recommendations) — users like the service so much that they recommend it to others.
Revenue (customer monetization) — users get paid.
Three tips for early-stage investors:
- Always look at metrics over time.
- Always be clear about basic terms:
- A customer can be a website visitor, a registered user, less often, a paying and satisfied user (company);
- Revenue is different: Recurring, Booked, Recognized, Gross, Net, Unrealized, etc.
Startup valuation and ownership are only some of the important for a successful exit and capital appreciation. Instead, the structure of the deal and the main terms and conditions are essential.