How Many Monthly Recurring Customers Do You Need for a 0.5 Million Investment?

With the VC method, if your customers buy your product every month:

Steps

  1. Estimate your investment
  2. Estimate the investor’s equity stake
  3. Calculate your valuation. Valuation = investment / equity stake
  4. Estimate the investor’s required money multiple
  5. Calculate your exit value. Exit value = valuation * money multiple
  6. Estimate the buyer’s revenue multiple at exit
  7. Calculate your annual revenue at exit. Annual revenue at exit = exit value / revenue multiple at exit
  8. Calculate your monthly revenue at exit. Monthly revenue at exit = annual revenue at exit / 12
  9. Estimate your price per product at exit
  10. Calculate your monthly number of products at exit. Monthly products at exit = monthly revenue at exit / price per product at exit
  11. Estimate the number of products per invoice at exit
  12. Calculate your monthly number of invoices at exit. Monthly invoices at exit = monthly products at exit / products per invoice at exit
  13. Calculate the monthly total number of customers at exit. Monthly total customers at exit= monthly invoices at exit * invoice interval
  14. Estimate the life of a customer at exit
  15. Calculate your monthly number of new customers at exit. Monthly new customers at exit = monthly total customers at exit / life customer