what we look for after the first sale

identify what actually repeats

separate contracted revenue, subscriptions, recurring usage and one-off projects. explain what a customer has committed to and what can change. a renewal option is different from a binding commitment; an invoice is different from cash received.

one-off delivery can support a useful business. it is less aligned with our current venture and investment focus when each sale requires a substantially new project and there is no credible path to continuing customer value and recurring revenue.

look at customers over the same period

choose a defined customer group and reporting period. record customers at the start, those retained, those lost and new customers separately. then look at revenue from the original group, distinguishing renewals, expansion and contraction. avoid changing the group or period halfway through the comparison.

for an early startup, the numbers may be small. show them honestly and explain their limits. a few customers renewing can be a useful observation without establishing dependable retention across a wider market.

understand the work behind the revenue

• what must the team do each time another customer joins?
• which costs increase with usage, support or service delivery?
• how much of the product is repeatable, and how much is bespoke work?
• does one customer or channel account for a large share of income?
• how long does payment take, and what working capital is needed?
• what would happen if a major customer reduced usage or did not renew?

keep the comparison honest

consider a hypothetical service with ten customers at the start of a quarter. eight remain at the end and four new customers join. the larger closing customer count does not mean all original customers stayed. explain both acquisition and retention, then examine the value and cost of each relationship.

this is an illustration, not a lab2sky investment result. the useful question is why customers continued, why others left and whether the business can deliver the promised value economically.

check the outcome alongside the renewal

renewal does not, by itself, prove a positive impact. define what improves for customers or other affected people, how it is measured and what adverse effects could grow alongside the business. distinguish reach, use and outcomes.

at the build stage these are hypotheses to test. for a series a assessment, we expect dated operating evidence. our interest is in revenue that can sustain the work of delivering a substantiated benefit.