From the Founder's Desk — Odunsi Ayanfeoluwa, Co-founder & CEO
If we plan to raise venture capital, sit in board meetings, or speak with institutional investors, there are about 30–40 business terms we should know cold. This lesson is the shortlist — the ones that decide whether an investor takes us seriously in the first five minutes.
“Money is never free. Every naira has a cost. Every month has a burn. Every runway has an end.”
1. WACC — Weighted Average Cost of Capital
The average cost of every naira the company uses to finance itself. Money isn't free. A company raises capital from equity (selling shares) and debt (loans, bonds). Each has a cost. WACC combines both.
Why VCs care: if you pitch an expansion that returns 8% while your WACC is 16%, an investor concludes you don't understand your own cost of capital. That is a management red flag.
2. CAC — Customer Acquisition Cost
CAC = Marketing Spend ÷ Customers Acquired. Spend ₦5m on ads, acquire 500 customers → CAC = ₦10,000. This is usually one of the first numbers an investor asks for.
3. LTV — Lifetime Value
How much one customer generates before leaving. A customer paying ₦10,000/month for an average of 36 months = ₦360,000 in revenue. At a 70% gross margin, LTV ≈ ₦252,000.
LTV : CAC
| Ratio | Meaning |
|---|---|
| Below 1 : 1 | Losing money on every customer. |
| About 3 : 1 | Healthy for most businesses. |
| 5 : 1 or more | Excellent — assuming the numbers are sustainable. |
| 25 : 1 (LTV ₦250k / CAC ₦10k) | Fantastic — but investors will pressure-test the assumptions. |
4. Burn Rate
How fast you're spending money. ₦120m in the bank and ₦10m of monthly expenses = a burn rate of ₦10m/month.
5. Runway
How long before you run out of cash. Cash ÷ burn = runway. ₦120m ÷ ₦10m = 12 months. Almost every investor asks: how much runway do you have?
6. EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortisation — how much cash the business generates from operations, before financing and certain accounting charges. Very common in acquisition and valuation conversations.
7 & 8. ARR and MRR
- MRR — Monthly Recurring Revenue. If subscriptions were ₦500k last month and ₦700k this month, MRR grew ₦200k.
- ARR — Annual Recurring Revenue. ₦2m in monthly subscriptions × 12 = ₦24m ARR.
- Growing ARR is what SaaS investors underwrite most valuations on.
9. Gross Margin
What's left after direct costs. Revenue ₦100m, cost to deliver ₦30m → gross margin = 70%. High gross margins usually make companies more scalable and more attractive to investors.
10. EBITDA Margin
EBITDA ÷ Revenue. Shows how operationally efficient the business is once you strip out financing and accounting effects.
Cash Flow, Free Cash Flow, CapEx & OpEx
- Cash flow — the actual movement of cash. A profitable business on paper can still die when cash runs out.
- Free Cash Flow (FCF) — cash left after operating expenses and capital expenditure. Positive FCF gives the business flexibility.
- CapEx — money spent on long-term assets (buildings, equipment, data centres).
- OpEx — everyday operating expenses (salaries, rent, marketing, utilities).