Today, I delved into some of the emerging metrics in the Venture Capital world: VVC (Velocity of Value Creation) and RVVC (Relative Velocity of Value Creation).
VVC (Velocity of Value Creation)
VVC stands for Velocity of Value Creation. It represents the speed or rate at which a startup or investment is generating value. It’s a crucial metric to gauge how rapidly a company is increasing in value, be it through growth strategies, operational improvements, or other positive catalysts. In the VC landscape, a startup with a high VVC could signal a potent potential for returns on investment.
RVVC (Relative Velocity of Value Creation)
Building on the concept of VVC, RVVC is the Relative Velocity of Value Creation. It’s a comparative metric, potentially used to measure the VVC of a company against peers or a benchmark. In simpler terms, while VVC tells you how fast a startup is growing in value, RVVC might tell you how that speed compares to other relevant startups or industry standards.
Why They Matter in VC
Venture Capital is all about spotting potential unicorns early on. While traditional metrics like user growth, revenue, and profitability remain crucial, metrics like VVC and RVVC provide VCs with a nuanced perspective on a startup’s growth trajectory. In a world where the early bird gets the worm, understanding these metrics can give VCs the edge they need.