Challenges in Recurring Payments

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Recurring revenue brings many benefits but it also brings a few challenges.

Lookout for these issues with recurring payments:

Scalability -- traditional billing structures are designed for one-off payments and not recurring.

As your company grows it will need a scalable solution for taking payments.

Failed payments -- the customer's credit card is maxed out and can't fund any more payments.

Consider tools for dunning which is the process of retrying the card over time.

Invoices -- you’ll need to move away from manual invoicing to automated invoicing.

This requires a system for capturing the details of the invoice including the services charged and payment to be made.

Cost of service vs price charged -- to be profitable the business must charge more than the cost of the service.

Calculate the unit economics of your business to ensure the pricing is sufficient.

Revenue recognition -- revenue must be recognized for accounting purposes.

Recurring revenue has strict rules around revenue recognition which are different from one-off invoices.

Visibility -- many departments in a company need access to the recurring revenue payments from the customer.

Sales, marketing, support, and other groups need to know the current status of the payment for reporting purposes.

Consider these issues when setting up your recurring revenue business.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
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In this episode of Investor Connect, we dive into two distinct yet promising sectors: medical diagnostics and sleep technology. Michael Cormack from Corwin Medical elaborates on the company's efforts to tackle peripheral artery disease (PAD) through innovative diagnostic systems that leverage multi-element ultrasound arrays and AI-based algorithms. He elaborates on the severe impact of PAD, its high mortality rate, and the cumbersome nature of current diagnostic tools like the Doppler Pencil Probe. Michael outlines their unique Ultrasense system, which promises faster, more accurate diagnostics, detailing a robust business model and strong leadership geared towards high-margin revenue and strategic industry partnerships with entities like Medtronic and Philips. He highlights the company's commercialization timeline and financial trajectory towards profitability by 2026, supported by a strong patent portfolio and seed funding efforts. The compelling patient stories and strong market need underscore the critical importance of their work in early PAD detection and intervention.

Following this, we turn our focus to SleepScore Labs with Colin Lawlor, who shares his journey from ResMed to founding an organization dedicated to leveraging AI and data for improving consumer sleep. Recognizing sleep's critical role in overall health, Colin outlines how SleepScore Labs utilizes proprietary sleep data and intervention studies to provide companies with actionable insights and personalized coaching solutions. The importance of sleep for mitigating chronic diseases and optimizing wellness drives their market opportunity, particularly through B2B2C models with partners like Mattress Firm and Terabody. By highlighting their success in Germany, where their platform is reimbursed by insurance without a doctor's prescription, Colin emphasizes the robust, scalable business model ready to capitalize on the growing demand for sleep solutions.

The episode closes with both Cormack and Lawlor discussing their exit strategies and potential for partnerships with industry giants, illustrating the potential for innovation in medical diagnostics and sleep technology. The detailed exploration into these fields gives investors and entrepreneurs critical insights into the paths to market success and the transformative potential of these cutting-edge technologies. Team and Funding 30:14 Q&A and Conclusion

Metrics for Tracking Recurring Revenue

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

There are several metrics to track the health of a recurring revenue business.

Here are some key metrics to know:

Cost of customer acquisition -- this calculates how much sales and marketing spend goes into signing up a new customer.

Life-time value -- this calculates how much a customer spends on the product over the lifetime of that customer on average.

CAC:LTV ratio -- compares the cost of customer acquisition with the lifetime value to create a ratio.

A 1:3 ratio is the floor for a successful business.

ARR -- annual recurring revenue measures the revenue based on annual contracts.

MRR -- monthly recurring revenue measures the revenue based on monthly contracts.

Net MRR -- this measures the amount of additional revenue the company generates month over month.

Churn -- the percentage of customers who opt out of using the product by canceling.

ACV -- Average Contract Value -- this is the amount customers are paying for the product on average.

ARB -- Annual Recurring Billings -- this is the amount all customers pay annually.

Track these metrics so you understand the current state of your recurring revenue business.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.