Evaluating Startups: What Metrics Matter the Most?

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In the previous blog, we have discusses what are the “5 most important questions to ask your organization and yourself before going to bed with startups?” Now that you are ready to dive into the startup world, let’s review the essential metrics for startup evaluation to determine how suitable the case is for your needs and how likely it is to survive long-term.

It is important to understand that the company evaluation for early-stage startups and more advanced growth companies (aka scale-ups) can and will differ. The younger (the more early-stage) the company is, the more essential it is to remain focused on finding the first paying customers as soon as possible to find and prove the product-market-fit. Wherein growth companies fight for the firm position on a market space comparing to its competitors, set a steady revenue stream, scale its operations, grow the team and attract new investment/partnership opportunities. Hence, identifying what stage company your corporate seeks for will then determine what metrics matter the most in startup evaluation.

Since Catapult’s services rely heavily on data, only more advanced growth companies are to be seen in the data-pool, and consequently to be validated for startup-corporate collaboration. Metrics presented below correspond to the needs of corporates to find and collaborate with more advanced cases.


What metrics matter the most when evaluating a startup from corporate perspective?

 
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FINANCE DATA

  • Investments & Investors

  • Turnover

  • Valuation estimations

  • Estimates of the runway with present funding


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TRACK DATA

  • Descriptions of the product/service

  • Growth speed

  • Growth speed of the company compared to competitors

  • Presence in different medias weekly compared to competitors


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TEAM DATA

  • Founders & their success with previous ventures

  • Team members & their background

  • Employees growth

  • Board members & Advisers

 

In the next blog posts, we’re going to dive deeper into each data-driven metric and understand how to comprehend data to make conclusions on startup evaluation.

 

5 Questions to Ask Your Organization Before Partnering with Startups

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The global business landscape is transforming at a speed of light. Why? - Rapid digitization. Not only did it boost the creation of many new products and services, but a new way of thinking. Big companies, aka corporates, are now stepping up and speeding up the game by finding external technologies and innovations rather than developing those in-house.

In fact, based on the results of a recent survey (study by the Unilever Foundation) of 204 corporate brand managers and 114 startups about how their companies planned to collaborate together: 80% of corporates believe that startups can have a positive impact on a large company’s approach to innovation; 89% of startups believe they’re able to deliver business solutions which can scale. Great numbers, right?

Before acting on them and starting collaboration with startups, let's review some crucial questions that each corporate and its CTO (or Head of Digital) has to answer. 


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What questions you should ask your organization and yourself before going to bed with startups?

 

Question #1: Do you know what you want to achieve?

Sounds basic and trivial? Maybe. But often companies embrace startup-corporate collaboration for the wrong reasons, that are not aligned with company’s short-term and long-term strategies, across departments or among corporate’s leaders. Understanding what is the main target and why to partner with startup is crucial. It is also about setting preliminary goals in accordance with available resources (budget, people, time, know-how etc.) within organization.


Question #2: Did you decide what type of collaboration is suitable for your organization?

There are many ways to build collaboration with startups. Are you seeking for new technologies, innovations and solution providers to collaborate with? Is your main goal to find an investable company? Are you serious about acquiring a promising startup? Or perhaps you are looking into establishing in-house acceleration program? Or it is just about becoming a client for an interesting startup company utilizing / redistributing their products and services? Could it be something entirely different? Drawing a clear path for partnership is not only one of the main criteria for startup scouting and validation, but a fundamental internal strategy to be agreed upon in advance with staff involved in venture collaboration.


Question #3: Do you have a dedicated person or a team for venture collaboration?

Undertaking a project like finding new technologies or building sustainable relationship with startup(s) is a herculean task, that is not to be tackled alone. It would mean recruiting/assigning a dedicated person, or a team, or even an entire department to oversee venture-collaboration activities. It is of the essence to ask: Can we validate ourselves which startups/technologies are the right ones, or we do recruit an external partner with in-depth knowledge about startup ecosystem? Are we going to scout relevant technologies through digital tools, consulting firms, events or elsewhere, and what human resource do we need in accordance to the chosen path? Assigning roles and responsibilities before diving into the world of startups and growth companies is one way to minimize risks and assure successful collaboration.


Question #4: How do you feel about the future of your industry, and your company’s place in it?

Take a look at your industry, its trends, its market leaders, its growth. Nowadays, timing is a pressing matter. With more Ubers and AirBnBs challenging big traditional players, corporate giants need to act fast to the changes in the industry, predict future trends and compete with new, more agile growth companies and technologies. Approach it as a standard interview question: “How do you see your organization in 5 years?!” And continuing: Will the industry still exist? Are you confident that your current direction will strengthen your position on the market in the near future? Are you fast enough to find promising technologies, growth companies and innovators? What are other corporates doing in this focus area and are they succeeding?“ Senior management needs to understand how new technologies may impact their business field in order to recognize and develop relevant solutions.


Question #5: Are you ready to adapt startup culture?

Good startups are like good programmers. You don't choose them, they choose you. Ask yourself: what can we offer to a startup? Are we sexy enough? Can we move along with the same speed? Here are just a few major differences and pitfalls in innovation and organizational structure that you might face: (1) Startups cannot be approached top-down way, but rather at eye level. (2) Failure is a natural milestone for a young company, wherein in many corporates even the slightest sign of failure has a heavy cost for those involved, hence are often avoided and not openly acknowledged. (3) Things move at a speed of light in a startup company - few months can mean growth or death valley, new corporate deals, radical pivoting etc., wherein corporates might take months just to make a decision on venture collaboration.

At the end of the day, it’s all about expectation management, ambition level, speed and adaptability. Senior management has to be ready to adapt, make fast decisions, and throw overboard conventional and tested ways of thinking, i.e. be curious and open-minded.


Let’s see whether you’re ready to collaborate with startups?

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Top 10 Digital Transformation Trends in 2019

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SMEs and corporates alike are in the process of planning next year’s budget, KPIs and strategies. Here is what to expect in the upcoming 2019: the reappearing trends in digital transformation and the new ones that are expected to kick off.

Most organizations project that 50%+ of their revenue will come from digital by 2020, while the World Economic Forum estimated that digital transformation will contribute over $100 trillion in value to businesses and society by 2025. Spoiler alert: one of the biggest digital transformation trends that organizations will take a note of is the change in leadership innovation. A recent Randstad study found that 95% of 3,000 surveyed companies believed they needed a new and different types of leadership to address the impact that digitization will have on their operations.

In today’s era of volatility, there is no other way but to re-invent. The only sustainable advantage you can have over others is agility, that’s it. Because nothing else is sustainable, everything else you create, somebody else will replicate.
— Jeff Bezos, Amazon founder
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The fundamental trend which is seen throughout this year and is expected to grow even stronger in the upcoming 2019 is the corporate ability to stay lean, agile, innovative, make fast decisions on digital transformation, experiment and deploy new emerging startup technologies to take digitalization to the next level - both internally (company-wide infrastructure) and externally (services/products for customers).

Stay tuned for more industry insights and digital sneak peeks!

Yours, Catapult team.


Source:

https://www.zdnet.com/article/the-biggest-lessons-learned-in-digital-transformation/

https://www.forbes.com/sites/danielnewman/2018/09/11/top-10-digital-transformation-trends-for-2019/#4e7644d23c30

https://aimconsulting.com/insights/blog/digital-transformation-emerging-trends-for-2019/

5 Disruptive FinTech Startups

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Fintech industry is booming - innovators and entrepreneurs across the globe are taking over. VCs are making the biggest bets in the financial sector, and the exponential growth of VCs spending doubled in 2018 comparing to all of 2016 and 2017 put together. Fintech is a multi-billion dollar industry with nearly 1,500 venture capitalist-backed deals - and the year is not over yet.

Completed VC deals for fintech startups

Apart from Stripe and SoFi, the vastly growing services that pop in the media and on the market a lot, there are dozens of newly born fintech unicorns that conquer B2C and B2B markets. We’ve picked 5 fintech growth companies that have become unicorns by challenging banks and other institutions with new disruptive technologies.


1. Revolut

www.revolut.com

London, England

This banking app provides mobile foreign exchange services designed to help in global money transfer. Expanded to the sectors of cryptocurrency trading, property investment and insurance, Revolut has quickly raised a whopping $250 million led by DST Global at a valuation of $1.7 billion in April. At the moment, a unicorn has a growing number of over 2 million customers with a count of £15 billion-worth of transactions.  

2. OakNorth

www.oaknorth.com

London, England

Another London-based fintech startup worth mentioning is OakNorth, which provides lending solutions for SME. The idea of giving loans that are backed by cash flow or a mix of other assets instead of property appealed to to several backers Singapore's EDBI and NIBC Bank, bringing OakNorth to the funding rounds of total $576 million.

3. N26

www.n26.com

Berlin, Germany

N26 is considered to be one of Europe's pioneers in digital banking, providing mobile banking services intended to redesign banking for the people, making it simple, fast and contemporary. Germany's unicorn raised $160 million in a round led by Allianz X and Tencent. It is expected that the company will process around $16 billion in transaction volume in 2018.


4. Coinbase

https://www.coinbase.com/

San Francisco, California

Continuing the cryptocurrency trends, US-based unicorn, Coinbase, is a digital currency wallet and platform where merchants and consumers can transact with new digital currencies like bitcoin, ethereum, and litecoin. The company has raised $217 million in funding, which allowed it to gain a unicorn status with a $1.6 billion valuation.

5. Atom Bank

www.atombank.co.uk

Durham, England

A mobile-only bank intended to offer internet banking services, Atom Bank, focuses on business lending and mortgage products. The company’s valuation is £450 million with netted £149 million in a round led by BBVA (again) and Toscafund. Atom Bank has already taken around £1.3 billion in deposits, as well as lent out more than £1.2 billion to businesses and homeowners.


Now, the real question arises - what is the next step for big banks and financial institutions to up the game, when competing for the same market space alongside innovators and disruptors becomes harder and harder? Catapult has an answer to that question - with its result-oriented and data-based services that help big corporations find the best tech solutions across Europe.

Stay tuned for more industry insights and digital sneak peeks!

Yours, Catapult team.


Unicorns, DX and Google’s 20th

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It’s hard to imagine, but we've been using the term 'Google it' for 20 years, and, topics of our search as well as the way we search information has changed a lot. Affected by the inevitable technological leap forward in both B2C and B2B, we no longer do MP3s and chat rooms. For the occasion, Google published 17 fun Easter eggs, that can be found in Google Search today, and are nearly considered to be the spelling mistakes or the ghosts of our retro past. Is Google a new Millennial? Here are some of the picks:

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MP3 file / Stream music

Watch a dvd / Streaming subscription

Page me / New phone, who dis?

Chat room / Text the group

How to tell someone you like them / Swipe right

Digital pet / Fidget spinner

Clip art / GIF

Inspired by the Google’s celebratory Easter Eggs, the question arose: how far does the list go across industries and will it continue to grow exponentially? Technologies are emerging, the tech jargon has evidently transformed, processes become more digital and automated, artificial intelligence and machine learning evolves at a speed of light.

Worldwide spending on digital transformation (aka DX) technologies will reach $1.3 trillion in 2018, up 16.8% from the $1.1 trillion spent last year.

The trend is seen among more traditional industries as well. - Porsche has increased its total investment in VC activities by €150 million for the next five years. Why? “Porsche Ventures” initiative aims to gain access to trends, new technologies and business models. Companies across the globe are heavily investing in innovations, emerging technologies, and startups.  


Speaking of investments - to continue the fun Google’s Easter Eggs list:

Hotel - AirBnB

Taxi - Uber

Bank payment - Stripe

CD rental - Spotify

Physical store - Amazon


What these services have in common, or, to be precise, not-have in common? - The physical space, properties, cars... These giants and unicorns heavily invested in highly scalable, technology-driven concepts and complex IT infrastructures. It consequently enabled them to disrupt billion-dollar global industries. This statement is also supported by the recent McKinsey study, which shows that superior digital strategies can boost revenues by more than 15%.

Maybe the next DX unicorn is just around the corner? For the past year, Catapult has introduced hundreds of growth companies with outstanding technologies and digital solutions to its corporate clients. The only way to refrain the retro ghosts of our part from coming back is to build the new future. Catapult is here to help your company grow, scale and achieve success in the digital transformation! 


Stay tuned for more industry insights and digital sneak peeks!

Yours, Catapult team.