What is a “Discount” and a “Valuation Cap” in a convertible note?
Valuation Cap: Sets a maximum valuation at which the investor’s debt will convert into shares
What is a Convertible Note?
It is a short-term debt instrument (a loan) that will be structured to convert into shares of the company in the future
What is a startup’s “Runway” and how is it calculated?
It is the number of months the company can continue operating with its current cash before running out of funds
What is the “Burn Rate” metric (Cash Consumption Rate)?
It measures the amount of money (usually monthly) that a growing company spends to cover its operating losses
What is LTV (Lifetime Value) and CAC (Customer Acquisition Cost)?
CAC (Customer Acquisition Cost): The total average cost invested to acquire a new customer (marketing, sales salaries, etc.).
Is it profitable to offer financial rewards for referrals?
Yes, as long as the value of the reward is lower than the profit margin brought by the new customer. The secret lies in the bidirectional incentive
What importance does LTV (Lifetime Value) have in this context?
LTV measures the net profit that a customer generates throughout their entire relationship with the company. Referred customers tend to have an LTV
What is the real difference between loyalty and referral?
Loyalty is retention (getting the customer to buy again), while referral is expansion (getting the customer to bring in others).
What is CAC and how do these programs benefit businesses?
CAC stands for Customer Acquisition Cost. Referral programs drastically reduce this cost, since it is the customers themselves
Why is trust considered an economic asset today?
Trust reduces transaction costs and uncertainty. In a saturated market, a customer who trusts a brand decides faster
