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How to Read a Cue Card: A Section-by-Section Guide

Streamline Your Investment Decisions with Done Deal's Anonymized Cue Cards
Published by
Nadeem Ahmed Najeeb
on
July 4, 2024

Deciphering a company's potential from an anonymized cue card is a vital skill for investors, corporate development heads, and venture capitalists (VCs). Cue cards are designed to be simpler and more efficient than a dashboard filled with extensive data, making it easier for investors to manage a large deal flow and make quick go/no-go decisions. Let’s delve into a cue card section by section to help you make informed decisions.

Advantages of Cue Cards for Investors

- Quick Decisions: Cue cards enable fast go/no-go decisions.

- Standardized Format: A one-pager with the same structure across the platform, but with sector-specific key data.

- Expert Design: Designed by M&A experts who have managed numerous deals.

- Proven Success: All successful Done Deals started with these cue cards.

The cue card system doesn’t just stop at the evaluation stage. Once an investor and a company start a conversation, the cue card evolves into a comprehensive deal page. This deal page is further enriched automatically as the seller adds a data room, integrating all critical information seamlessly.

Reading a cue card

The cue card is divided into sections that cover crucial aspects of company information, including financial data, customer metrics, operational status, and team details, providing a comprehensive snapshot for investors to evaluate.

Company Overview

Description

This section provides a brief snapshot of the company's core activities and business model. Although anonymized, it highlights key aspects like industry focus, unique selling propositions (USPs), and market positioning.

Why Invest in Us?

Here, the company outlines its main selling points for potential investors. Look for statements about competitive advantages, market opportunities, and strategic initiatives that differentiate the company from its peers.

Reason for Acquisition/Raise Capital

Understanding the purpose behind the capital raise or acquisition is crucial. It could be for scaling operations, entering new markets, developing new products, or improving infrastructure. Assess whether the reasons align with market trends and growth potential.

Age of Operations

The number of years the company has been operational provides context about its stage of development. A company with 50 years of operation indicates stability and experience, while a newer company might offer higher growth potential.

Operational Status

This indicates whether the company is currently operational. An operational company signifies ongoing business activities and revenue generation, reducing the risk compared to a non-operational one.

Expected Valuation

The expected valuation gives a preliminary idea of the company's market value. It helps in assessing whether the company's financial expectations are realistic compared to industry benchmarks and your investment criteria.

Financial Data

The financial data presented on cue cards is sector-specific, tailored to provide relevant insights for the industry in question. In the context of a Direct-to-Consumer (D2C) company, key financial metrics include:

TTM Revenue (₹)

The trailing twelve months (TTM) revenue shows the company's recent revenue performance, providing insight into its overall market demand and operational capabilities.

Monthly Revenue (₹)

Monthly revenue indicates current revenue generation and seasonality effects, helping investors understand cash flow consistency.

Gross Margin (%)

Gross margin reflects the company's profitability, highlighting its cost management efficiency and pricing strategy.

EBITDA (₹)

EBITDA shows operating profitability, indicating financial health and operational efficiency.

Customer Data

Customer data is also sector-specific. For a D2C company, the following metrics are critical:

Total Paying Customers

Total paying customers indicate market penetration and customer acceptance, essential for understanding the company's reach and customer base.

Repeat Customer Rate (%)

Repeat customer rate shows customer satisfaction and loyalty, reflecting the effectiveness of the product or service in retaining customers.

RoAS

Return on ad spend (RoAS) measures the efficiency of advertising spend, providing insights into the effectiveness of marketing strategies.

Amazon Review

Amazon review scores offer a snapshot of customer satisfaction and product quality, influencing future sales and reputation.

 GA Icon and User Metrics

When the company has connected their Google Analytics, you can also see their website performance in real time:

Users and Sessions

Google Analytics data provide insights into site traffic and user activity, helping assess online engagement.

Bounce Rate (%)

Bounce rate indicates how many visitors leave after viewing only one page, with lower rates being preferable.

Avg Session Duration (mins)

Average session duration suggests user engagement with the website content, with longer durations typically indicating better retention.

Team Data

Team Size

Team size indicates the scale of operations and available resources, providing insight into the company's capability to execute its business plans.

Founder Pedigree

Assess the qualifications and experience of the founding team. Strong pedigrees can enhance confidence in the company’s leadership and strategic direction.

Conclusion

Reading and analyzing a cue card involves scrutinizing each section to understand the company's financial health, market position, customer base, operational metrics, and team strength. Done Deal's anonymized cue cards provide a structured approach to evaluate potential investments efficiently, enabling investors to make data-driven decisions without bias. Leveraging these insights can help identify high-potential opportunities in the competitive Indian startup ecosystem. This approach not only saves time but also enhances the quality of investment decisions, driving better outcomes in the competitive market landscape.

Join Done Deal today and streamline your investment process with comprehensive, anonymized cue cards that put essential data at your fingertips. Visit Done Deal for more details.