How can I evaluate my online venture on the basis of traffic and user acquisition to estimate the value of my company and do financial projections. Say, an online venture has 1000 registered users and getting around 200 posts a day, how can one evaluate the value of the startup and raise fund. Want the answer from both an investor's and an entrepreneur's perspective.
As an investor, those initial metrics are really just vanity metrics. Now, if you can translate those to revenue it really helps.
It all boils down to the Customer Acquisition Cost and Lifetime Value of the Customer and the actual revenue model. If it's advertising you're looking at CPM which is calculated by the specific type of site or target market and how many users are on your site at any given point. You want to be able to measure retention and conversion rate if its a site that you have to pay to be on. For example, if 500 of those users are paying members (for say $10 a month) and 200 of those started off as free, then you have a 20% conversion rate. Then you have made $5000. But, you also want to see the attrition rate, how many users stay after paying, ideally you want your acquisitions to be high and your attrition to be low.
On the flipside if the cost of acquiring a customer is $20, then you're losing money. Acquisition costs can decrease though with scale, obviously it's easier to get customers when you've reached a critical mass which decreases the cost.
All in all, it really depends on your business model in how you actually value your customers. I would check out the TechCrunch business model teardown http://techcrunch.com/2010/10/10/teardown-13-ways-10-million-revenues/