# How should an investor evaluate a capital-efficient company?

Evaluate whether the company can turn customer demand into durable cash generation without assuming that a later investor will fund every milestone. Test the evidence behind the revenue model, contribution margins, customer commitments, and repayment capacity, rather than rewarding low spending in isolation.

## Use the numbers as questions

Chapter 13 recommends talking directly to **three to five customers**; Chapter 6 uses **eight operating metrics** to connect revenue and margin to cash and runway. These are the book’s diligence practices, not a statistically sufficient sample or an investment guarantee.

One concrete underwriting cross-check in Chapter 6 is Lighter Capital’s requirement for recurring revenue from **four or more customers**. That makes concentration relevant to available financing, even when a founder accepts the concentration commercially. [Current provider criteria, checked October 30, 2026](https://go.speedstrapping.com/lighter-capital-apply).

## Worked example: the margin is not the cash

**Illustrative assumptions.** Two companies each report $1 million in annual revenue at a 50% gross margin. Company A collects before production and pays its supplier later. Company B pays for inventory upfront and collects after acceptance. The same $500,000 gross profit can support very different working-capital requirements.

Ask each company for a monthly cash forecast and test a major customer paying 60 days late. The investment question is not which company presents the higher gross margin; it is whether the operating model can absorb that delay and what capital would actually finance the gap.

## Verify the mechanism

Call customers about renewal and expansion, inspect payment terms, reconcile forecasts to actual cash, and identify which non-dilutive sources are genuinely available. Distinguish efficiency created by repeatable operations from underinvestment, deferred bills, or one exceptionally accommodating customer. Equity may accelerate a strong model, but it should not conceal an unresolved operating deficit.

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This page is an original summary of an argument developed in *Speedstrap*, not an extract from the book.

From Chapter 13 of *Speedstrap*. [Find the book on Amazon](https://go.speedstrapping.com/book).

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