The 7 key metrics investment companies are interested in prior to making an investment
David Wood
I help B2B product-based business owners unlock their full potential. If you want more Sales and Profit, Clarity, Control and Momentum, take my free business growth assessment and see how I can help you.
Things have changed dramatically since I sold my first business. However, the key metrics investors look at when investing in or acquiring a business have remained pretty much the same.
If you are looking to complete a fund raise or sell to exit, here are some of the key areas you need to focus on.
Revenue Growth:
Consistent and substantial revenue growth signals a healthy business trajectory.
Profit Margins:
Higher profit margins demonstrate operational efficiency and sustainability.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization):
This provides a clear picture of operational profitability.
Cash Flow:
Positive and steady cash flow is crucial for ongoing operations and growth initiatives.
Return on Investment (ROI):
Investors want to see a compelling return on their capital.
Debt Levels:
Lower debt indicates better financial health and reduces risk.
Customer Acquisition Cost (CAC) vs. Lifetime Value (LTV):
A favourable ratio indicates effective marketing and customer retention.
A strong focus on increasing revenue, optimising costs, and demonstrating sustainable profitability is key to increasing company valuation.
Highlighting innovative strategies, market leadership, and potential for scalability can also positively influence investors' perceptions. If you'd like more tailored advice, feel free to ask for specific details.
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