Analytics Metrics - Venture Capital
Analytics metrics is a name that is being heard often in the website, search engine, and software fields. What is the relationship of analytics metrics to venture capital?
What is the relationship between analytics metrics and venture capital? Well, one obvious answer is the number of venture capital investments in companies developing new analytics metrics solutions and programs. Metrics is really just a fancy way of saying counting standards. A metric might be the number of people that attend a baseball game. The idea of analytic metrics is determining numbers that have meaning and can give a good idea of what is really happening.
To use the example of the baseball game, the number of people attending is one metric, but it gives very little understanding of some important questions. These questions are like who and why. If the baseball club were to determine some other metrics for the game in question, like men versus women, children versus adults, season ticket holders versus one time ticket buyer, they would have more idea of the make up of the crowd. Matching these metrics with variable factors such as weather, opposition, record of the team at the time of the game, and even promotional activities makes them analytical metrics in that they can make some future planning based on the information.
Venture capitalist have been making use of some new analytical metrics in the valuation of companies they are considering for investments. It is a changing world and they are seeing the need for new standards that would help identify high risk ventures that have a potential for a high ROI. The tried and true metrics of the accounting systems of the past are giving the same information to everyone. The traditional bank is using these metrics to reject the financing needs of the company. The venture capitalist needs to seek some new ones.
This use of new analytical metrics is not limited to internet business, by any means, but it is there where it is most seen. Analytics metrics have been used by SEOs for a long time to evaluate and improve web page visibility. The venture capitalist interested in a dot com type of company will fast learn the value of analytics metrics. It is in some part the result of the dot com bust that so burned the venture capital industry that new methods have been developed to study the potential of internet based business.
Analytical metrics has also been discussed in philanthropic venture capital investment. In these cases, what is considered success and ROI to the philanthropist differs greatly from the standard bottom line dollar amounts of the more traditional investor. They are looking for something entirely different from their investments, and entirely new methods of measuring results are needed.