The Story
BrightZen Systems partners with companies in various categories we can scan an industry segment from the bottom up to identify Financeable Equations hidden in plain sight.
Once a Financeable Equation is discovered we ramp up lead generation, test funding, operating team building, investment committee and board formation and facilitation to independence. Including:
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Entities
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Web sites,
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Inbound leads,
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Licensing and cleared other regulatory hurdles,
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Evaluating opportunities while honing an evaluation process,
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Proposal negotiation,
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Contracting,
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Data systems,
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Management processes.
Notes for future edits
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a way for additional capital to come in easily
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a crowdfunding campaign & inviting our crowd
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the ability to communicate at scale with an investor list.
LTV:CAC
The most important component of a Financeable Equation is the ratio between customer acquisition cost (CAC) and Lifetime Value (LTV).
Revenue streams (and therefore businesses) increase in value with:
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Higher LTV:CAC ratio
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Faster time to payback
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Higher rate of customer acquisition
There are not any standard definitions of what to include in CAC and how to calculate LTV so naturally, entrepreneurs take wide latitude in how they present this ratio to position their company in the best light. (See the Magic Cohort.)
It’s is this ambiguity that caused me to rename LTV to LTGP or Lifetime Gross Profit at Assembled Brands Capital.
Lifetime Revenue = Average Order Value / (1- Repeat Customer Purchase Rate) Repeat customer order rate = This month’s orders from repeat customers / last month’s total orders Lifetime Gross Profit = Lifetime Revenue * Gross Margin
Gross margin should be the “realized gross margin”. Realized Gross Margin is calculated when the Cost of Goods Sold includes:
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Fully landed product costs
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Fulfillment expenses
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Merchant account processing costs
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Cost of inventory shrinkage
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Return processing costs
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Discounting
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Sell through rate (in apparel and similar businesses)
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San Diego, CA
Rochester, NY
Albany, NY
Manila, Phillipines
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