The Importance of High Gross Margin for Investors and VCs

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High gross margin allows companies to have more funds for marketing, research & development, and operations, making them more attractive to investors. High gross margin companies tend to have higher enterprise value multiples and are more likely to trade at higher valuations when they go public. VCs are more interested in high gross margin businesses like software, marketplace, FinTech, and consumer businesses. Conversely, VCs may not be interested in capital-intensive or traditional businesses with low gross margins. However, traditional manufacturing businesses can attract VCs by adding a high-margin subscription revenue stream to their offerings.

Today’s show:

Kruze COO, Scott Orn, joins Jason to discuss best practices for early stage startups to prepare for and execute successful board meetings. The two dive into the reasons VCs want governance through board meetings (00:56), what should be in a full board packet (6:51), formal things investors look for (11:10), and much more!

Timestamps:

(0:00) Kruze COO, Scott Orn, joins Jason (00:56) The reasons VCs seek governance in startups and key tips for developing a standardized board presentation (6:51) Building a startup financial package and the importance of presenting a financial flash page at the start of a board meeting. (11:10) Essential factors investors consider during a board meeting (15:08) The most common question regarding in-depth operational metrics (20:51) Examining R&D and engineering support expenses in the calculation of the cost of goods sold * Check out Kruze: https://kruzeconsulting.com * Follow Scott: https://twitter.com/scottorn

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