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In the dynamic startup ecosystem, making precise and informed decisions is crucial for success. Yardstick, developed by VentureInsights, revolutionizes how fintechs underwrite credit, investors make data-driven decisions, and founders gauge competitive positioning. This tool provides comprehensive benchmarks and deep analytics to empower stakeholders with actionable insights.

This white paper is organized to cater specifically to the interests and needs of each key user group, providing a focused exploration of Yardstick’s capabilities and benefits:

Introduction to Yardstick - Overview of Yardstick’s features and the value it brings to the ecosystem.
Empowering Fintechs - Details on how Yardstick supports fintechs in accurate credit underwriting and risk assessment.
Tools for Investors - Examination of how Yardstick aids investors in evaluating startup performance and making informed investment decisions.
Insights for Startup Founders - Discussion on how Yardstick helps founders understand their market standing and benchmark against peers.
Technical Overview - An in-depth look at the methodologies, data analysis techniques, and technology powering Yardstick.
Conclusion and Exclusive Access to Yardstick - Summary of key points and an invitation to engage further with Yardstick.
Through detailed insights into each aspect of Yardstick’s utility, this document aims to showcase how it translates complex data into strategic advantages, enabling smarter decisions across the startup landscape.

Section 1: Introduction to Yardstick
Yardstick transforms complex data into actionable insights, equipping fintechs, investors, and startup founders with the tools they need for precise evaluation and decision-making. Here’s an in-depth look at the primary functionalities that set Yardstick apart:

Extensive KPI Tracking
Yardstick allows users to track a wide range of key performance indicators (KPIs) such as Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR), and others over time. This tracking enables users to monitor financial health and growth trajectories comprehensively.

Advanced Benchmarking
Users can benchmark their startup’s performance against an extensive database of peers. Yardstick provides percentile rankings that show how a startup compares to others based on various criteria, including industry, geographic location, and funding stage. This feature is crucial for identifying competitive strengths and areas for improvement.



Dynamic Valuation Estimates
Yardstick calculates estimated valuation ranges based on current KPIs and market traction. This dynamic assessment helps startups and investors understand the potential market value and track valuation changes over time.

Try out basic Yardstick features here without signing up.

Data Enrichment (Upcoming Feature)
Yardstick plans to enhance its service by including data enrichment features, which will aggregate additional online information about startups, such as user reviews, GitHub stars, and employee counts.

Customization and Integration
The platform offers high customization capabilities, allowing users to filter data according to specific needs such as industry, YC batch, or geography. Additionally, Yardstick’s API facilitates seamless integration with other systems, enhancing user experience and data utility. Check out Yardstick API Docs for more details.

Comprehensive Data Visualization
Visual tools like graphs and charts display KPI trends and benchmarking results, making complex data easier to understand and act upon. This visual representation helps users quickly grasp their standing and progress in a visually engaging and accessible format.  

 

Section 2: Empowering Fintechs
Yardstick: A Strategic Tool for Fintech Credit Underwriting and Risk Assessment

In the fintech sector, the ability to accurately assess the creditworthiness and potential risk of startups is crucial. Yardstick equips fintech companies operating in segments such as Revenue-based Financing, Lenders to Startups, Credit Cards to Startups, etc. with advanced tools to enhance their decision-making processes, making credit underwriting both more efficient and effective.

Detailed KPI Analysis for Credit Assessment
Yardstick provides fintechs with the capability to conduct deep dives into financial KPIs. These metrics are vital for assessing a startup's financial health and predicting its future cash flows—key factors in determining creditworthiness.

Benchmarking for Comparative Risk Assessment
Using Yardstick, fintechs can benchmark a startup against peers within the same industry, stage, and geography. This comparative analysis helps in understanding a startup's performance relative to its competitors, which is critical in assessing risk. A startup that consistently outperforms its peers might be deemed a safer credit risk.

Real-Time Valuation Insights
Yardstick's dynamic valuation tools provide real-time insights into the potential valuation of startups based on current and historical data. This information can be crucial for fintechs when determining the size and terms of loans or credit facilities, ensuring that exposure levels are always aligned with the startup’s market value.

Customizable Metrics for Tailored Risk Models
Fintechs can customize the metrics and filters used in Yardstick to match their specific risk assessment models. Whether focusing on growth metrics, burn rates, or revenue patterns, Yardstick’s flexible platform allows fintechs to tailor the data to fit their unique requirements.

Yardstick APIs: Seamless Integration into Existing Systems
Yardstick’s API integrates seamlessly with existing fintech platforms, allowing for the automated import of relevant data. This integration simplifies the process of updating and maintaining risk assessment models, ensuring that fintechs have access to the latest data without manual intervention. Check out Yardstick API Docs for more details.



User-Friendly Interface for All Team Members
The intuitive design of Yardstick ensures that team members across the fintech organization, from analysts to executive decision-makers, can easily understand and utilize the insights provided. This accessibility increases the efficiency of the decision-making process and ensures a uniform understanding across departments.

 

Section 3: Tools for Investors
Enhanced Investment Decision-Making and Portfolio Management with Yardstick

Yardstick equips investors with advanced tools to analyze, track, and manage startup investments effectively, bolstering both decision-making capabilities and portfolio oversight.

KPI Benchmarking and Valuation Insights for Investment Decision-making
Investors can utilize Yardstick to benchmark startup KPIs against a broad dataset of similar companies and gain real-time valuation insights based on the latest traction. This comprehensive analysis aids in evaluating potential investment opportunities by comparing them to industry standards and understanding their market position and growth potential.

Smart Updates and Portfolio Tracking
Smart Updates feature allows investors to automatically extract and integrate data from regular startup reports—whether monthly or quarterly—directly into the Yardstick platform. This functionality enables investors to continuously monitor the performance and valuation of multiple startups within their portfolio, making it easier to track progress, identify trends, and make data-driven decisions.



Risk Assessment Tools
By providing ongoing performance and valuation data, Yardstick helps investors identify potential risks early. Monitoring trends in KPI scores and valuations allows investors to spot red flags, such as underperformance or declining market value, enabling timely intervention or adjustment of investment strategies.

Seamless Integration and Data Management
Yardstick integrates effortlessly with existing investor tools. Reports forwarded to Yardstick’s Smart Updates are parsed for relevant data, which is then automatically incorporated into the investor’s dashboard. Additionally, Yardstick supports the importation of data via Excel, allowing for easy data management and integration.

Comprehensive Reporting and Data Export
Investors can generate detailed reports and export data from Yardstick for further analysis or presentation purposes. These reports provide valuable insights into startup performance, market trends, and investment viability, supporting both internal strategy discussions and external stakeholder communications.

Data Enrichment (Upcoming Feature)
Yardstick plans to enhance its service by including data enrichment features, which will aggregate additional online information about startups, such as user reviews, GitHub stars, and employee counts. This added layer of data will provide investors with a more holistic view of a startup’s online presence and operational dynamics, further informing investment decisions.


Section 4: Insights for Startup Founders
Empowering Startup Founders with Strategic Insights and Market Positioning

Startup founders face the ongoing challenge of not only managing their businesses but also understanding how they stack up against competitors and what their potential market value might be. Yardstick provides essential tools and data that empower founders to navigate these challenges with confidence.

Benchmarking Startup Performance
Yardstick offers founders the ability to benchmark their company’s key performance indicators (KPIs) against those of similar companies within the same industry, stage, and geography. This insight allows founders to see where they excel and where they may need to invest more resources, providing a clear picture of their competitive positioning.

Real-Time Valuation Estimates
Understanding the valuation of a startup is crucial, especially when preparing for fundraising. Yardstick’s dynamic valuation tools give founders real-time estimates of their company’s value based on the latest data. This feature not only helps in setting expectations for investment rounds but also aids in negotiations with potential investors.

Tracking Progress Over Time
Yardstick enables founders to track the progress of their startups over time through visualizations of growth trends and financial health. This longitudinal view helps founders make informed decisions about strategic directions and potential pivots, ensuring that they remain on track to meet their business objectives.



Preparing for Investment Rounds
By providing detailed insights into financial health and market positioning, Yardstick helps founders prepare for investment rounds. Founders can use data from Yardstick to craft compelling narratives for investors, backed by concrete data and benchmarking analyses.

Custom Reports and Presentations
Founders can generate custom reports and presentations directly from Yardstick, which can be used for internal reviews or investor meetings. These reports are designed to clearly communicate the startup’s status and prospects, showcasing the founder’s strategic understanding and readiness for growth.

User-Friendly Analytical Tools
Yardstick’s platform is designed with usability in mind, ensuring that founders can easily access and understand complex data. The user-friendly interface allows founders, regardless of their technical expertise, to benefit from deep analytics without needing specialized knowledge.

 

Section 5: Technical Overview
Harnessing Advanced Technologies for Precise Startup Analysis

Yardstick leverages cutting-edge AI/ML technologies to provide detailed, accurate benchmarks and valuations for startups. This section outlines the technical foundation that makes Yardstick a reliable and powerful tool for fintechs, investors, and startup founders.

Data Collection and Aggregation using LLMs
Yardstick uses LLMs to parse and aggregate data from a variety of sources including financial statements, public records, and direct submissions from startups. This data is rigorously cleaned and standardized to ensure consistency and reliability. Proprietary algorithms are used to handle data at scale, ensuring real-time updates and accuracy.

Machine Learning Models
At the core of Yardstick's technology are sophisticated machine learning models that analyze patterns and trends within the aggregated data. These models are trained to predict future performance and valuation outcomes based on historical data, providing users with forward-looking insights that are critical for decision-making.

Benchmarking Engine
The benchmarking engine uses statistical analysis techniques to compare a startup’s performance against its peers. It adjusts for variables such as industry, size, and market conditions to provide an accurate comparative analysis. This engine is continually updated to incorporate new data and refine its accuracy.

Real-Time Valuation Algorithms
Yardstick's valuation tools use a combination of traditional financial models and innovative algorithms that factor in both quantitative and qualitative data. These algorithms assess not just historical financials but also market sentiment, growth potential, and other non-traditional metrics to estimate a startup's valuation.

Security and Data Privacy
Understanding the sensitivity of the data handled, Yardstick adheres to stringent security protocols. Data encryption, secure data storage solutions, and rigorous access controls ensure that all data remains confidential and secure.

Scalable Infrastructure
Yardstick is built on a scalable cloud infrastructure that can handle large volumes of data and high user demand without compromising performance. This infrastructure supports the rapid deployment of updates and new features, ensuring that Yardstick remains at the cutting edge of technology.

Integration Capabilities
Yardstick offers extensive API support, allowing for seamless integration with other platforms and systems. This flexibility enables users to incorporate Yardstick's insights into their existing workflows and systems, enhancing overall productivity and efficiency.

 

Section 6: Conclusion and Call to Action
Driving Decision-Making Through Data-Driven Insights

Throughout this white paper, we have explored how Yardstick serves as a pivotal tool for fintechs, investors, and startup founders, providing them with the advanced tools necessary for precise benchmarking, valuation, and strategic decision-making. By leveraging the latest in AI and machine learning technology, Yardstick transforms complex data sets into actionable insights that empower users across the startup ecosystem.

Key Takeaways:

For Fintechs: Yardstick enhances credit underwriting and risk assessment with its deep analytical capabilities.
For Investors: The platform offers robust tools for evaluating startup performance and managing investment portfolios efficiently.
For Startup Founders: Yardstick provides crucial benchmarking and valuation insights that help founders understand their competitive positioning and prepare for successful funding rounds.
Engage with Yardstick Today

We invite you to experience the transformative power of Yardstick firsthand:

Request a Demo: Discover how Yardstick can be tailored to your specific needs and seamlessly integrate into your operational workflows.
Sign Up: Join the growing number of professionals who are harnessing Yardstick to make informed, data-driven decisions. Visit our website to get started.
Get early access to APIs: Please email us at onboard@8vdx.com to get early access to Yardstick APIs. 
Yardstick is committed to continual improvement and innovation. As we expand our features and enhance our platform, we welcome your feedback and look forward to growing alongside our valued users.

Take the next step in enhancing your startup analysis and investment strategies with Yardstick—where data meets decision-making.
Indian startups raised about INR 4,500 Cr of venture debt in 2021. For an asset class that is seen as the new kid on the block, this is more than twice the previous high. Companies went on a buying spree and investors raised larger funds. This year saw more than 100 companies raise venture debt, including Mensa Brands, Urban Company, Licious, and Zetwerk, with ticket sizes ranging from $2 to $25 Mn. 

In recent years, venture debt has become more integral to a startup’s fundraising strategy. However, as the venture equity market dries up and valuations of tech stocks in the public markets are down upto 70-80% from their peak, venture debt is becoming a much more sought after funding solution for startups looking to extend their runway. The choice for startups in the current environment is simple — do a down round where they raise additional equity at a significantly lower valuation from their last round and dilute heavily or raise venture debt where the equity kickers are struck at their last round valuation.

 
Here’s what venture debt looks like at different stages. 

Raising Pre-Seed And Seed
Pre-seed funding is an early funding round in which investors provide a startup business with capital (sometimes up to $2 Mn) to develop its product in return for equity in the company. If a startup raises pre-seed venture debt, it receives funds immediately instead of going through hundreds of rejections. 

It is less expensive than equity and if a company is able to access pre-seed venture debt, it could save a lot of dilution for the founders in the long run from the very beginning. Terms may include no cash interest with equity kickers instead, a convertible note, flexible payment plans, and no collateral. 

 
The startups will eventually have to pay this money back, and since early-stage venture debt is a novel concept and not easily available, it will be something the startup will have to explain on their captable. However, the convenience and cheap capital may be worth it. 

In light of the common practice of diluting more than 20% for capital in pre-seed and seed rounds with VCs and investors, a less dilutive alternative may be worth considering. Venture debt can be used by startups if they need fast capital without dilution as a bridge to their next fundraising round to accelerate growth before recruiting their first venture capital. In addition, international companies that are expanding into America may find it useful as well.

Seed Extension/Continuity Raise
If a startup needs more runway and more time to grow but doesn’t want to raise more money from venture capitalists or investors, venture debt can be super helpful here. Further, if a startup is interested in raising venture debt in tandem with venture capital to reduce the amount of dilution in the long run, that is another intriguing way to go about it. 

At this stage, venture debt could lengthen the runway and give the company more time to grow its valuation. This will ensure that the Series A can be raised on the startup’s own terms and be raised only when the startup wants to, not when the company has to.

Raising Series A
Bridge loan to Series A is still an early-stage venture debt, but it is sufficient if you have a good record of investor updates, a list of the investors and venture capitalists in your company. Be prepared to show these, as well as key metrics. Again, it is a good way to get access to capital without having to dilute even further. 

Raising Series B, C, And Beyond 
Venture debt in series B, C and beyond is a little different and is slightly more aggressive. Here is how. Terms are normally harsher, as we venture into the traditional venture debt sandbox. It becomes a traditional loan where terms are created to encourage payment. For example, terms might include a cash interest of 6% to 7%  and a 5% to 10% equity cover as well as collateral, cash flow sweeps, and bank account information. 

Since the terms can be harsh, finding a lender who you trust becomes, yet again, key. It is usually sought out in these stages when you have built something big and are not interested in taking more VC money and losing even more control of the company. If you need capital but are not interested in expensive equity, venture debt is your option. 

 
Key Takeaways
Making Venture Debt Work For You
Venture debt can sometimes get a bad reputation due to bad lenders, but there is no doubt that it has its uses. Venture debt is less expensive than equity. If you figure out how much capital your startup needs and how much you might be willing to dilute, it is possible to cut that number down by a significant amount by taking venture debt. 

Get a good lawyer to fully understand the terms of the deal. Early-stage venture debt is new and made possible by the fact that seed rounds today are the same size that series A was 20 years ago. Whether you decide to take up this type of funding at an early stage or not, find a lender you trust, as you will most likely come back to them in the future. 

Pros And Cons Of Venture Debt
To reiterate, the most compelling proof of venture debt is how cheap it is to equity and the convenience of getting the money when you need it, not when an investor decides they like you. This gives your startup more runway, it is less dilutive, and you gain a potential partner for your startup in the long run. However, you have to give this money back with interest, and if you choose a bad lender, it can harm your startup. This is why hiring a lawyer to help you understand what you might be agreeing to is important, as is researching a lender’s reputation, reviews, and past dealings.   

Conclusion
Venture debt can be an effective tool for growing your startup faster than you could without it. Its non-dilutive nature and timely convenience makes it an option worth considering for your startup. Venture debt can extend a startup’s runway and provide the lifeblood that allows startups to continue developing and growing. While it has its cons, the pros are compelling enough that every startup should seriously consider taking it and incorporating it into their growth strategy. 

All you need to do is be smart and tenacious enough to create a contract that works for you and your company in order to properly harness venture debt. Whoever you decide to do it with, if you learned even one thing from this guide or became a little less afraid of the term “venture debt”, that’s enough for us.