As a startup founder, you’re constantly pitching your vision to investors, partners, and stakeholders. But what truly sets apart a compelling pitch from a lackluster one? It’s not just the idea; it’s the numbers.
Knowing the key metrics that drive your business can make or break your fundraising efforts. These metrics are the foundation upon which investors evaluate your potential. They offer clarity on your progress, profitability, and prospects for growth. Simply put, fumble on your metrics, and you're unlikely to secure funding.
Whether you’re at the seed stage or beyond (Series A-B), understanding and presenting these metrics effectively builds credibility and confidence with investors. This guide breaks down the must-know metrics by stage, making it easier for you to prepare and impress during your next pitch.
Essential Startup Metrics (KPIs) for Securing Funding (by stage)
Seed Stage Metrics
At the seed stage, investors are betting on your vision and early traction. These metrics demonstrate that your idea has market potential and that you’re building a foundation for growth:
MRR (Monthly Recurring Revenue)
The predictable, recurring revenue you generate each month from subscriptions or product sales.
Example: If 50 customers pay you $20/month, your MRR is $1,000.
Revenue Growth Rate
How quickly your revenue is increasing (or decreasing) over time (monthly / yearly).
Example: If your revenue went up from $10,000 to $12,000 this month, your growth rate is 20%.
Burn Rate
How much money your startup spends (net cash outflow) every month.
Example: If you spend $50,000 monthly and make $10,000, your net burn rate is $40,000.
Runway
How long your cash will last/runs out (in months) at the current burn rate.
Example: With $200,000 in the bank and a $40,000 burn rate, you've 5 months of runway left.
Sales Cycle
The average time (in days) it takes to close a deal, from first meeting/contact to contract signed.
Example: If you meet a customer today (i.e. 1-Jan), who signs the contract in 30 days (i.e. 1-Feb), then your sales cycle is 30 days.
Churn Rate
The percentage of customers who stop using your product in a given time.
Example: If 10 out of 100 customers leave a particular month, then your churn rate is 10%.
Median Customer Churn Rates by Industry is here.
Market Validation
Proof that users/customers are interested in your idea i.e signups, pre-orders or great feedback.
Example: If 1,000 users join your waitlist after launch, that's strong market validation.
Retention Rate
How many paying (active) customers stick (stay) with you month over month.
Retention Rate = 1 - Churn Rate
Example: If you had 100 customers last month and 95 are still active, your retention is 95%.
Series A Metrics - (Everything in Seed, plus below ones)
As you move to Series A, the focus shifts to scalability. In addition to the seed stage metrics, investors want to see how efficiently you’re acquiring and retaining customers, as well as the long-term value they bring.
Customer Acquisition Cost (CAC)
Reflects the average cost of acquiring a new customer.
Example: If you collectively spent $10,000 on promotions, and got 50 new/signed customers, your average CAC is $200.
CLV (Customer Lifetime Value)
The total revenue you expect to make from a customer over their lifetime.
Example: If a customer pays $50/month and stays for 12 months, their CLV is $600.
Average Revenue Per User (ARPU)
The average revenue generated per customer, typically used in SaaS or subscription-based startups.
ARPU = Total Revenue / Total Number of Users.
ARR (Annual Recurring Revenue)
Your total subscription revenue, projected for a year i.e. your MRR annualized to show projected yearly revenue.
Example: If your MRR is $10,000, your ARR is $120,000.
Gross Merchandise Value (GMV)
The total value of sales in a given period (quarterly/annually). Often used in e-commerce.
GMV is not the same as overall revenue, which can include fees or services.
Gross Margin
How much money is left after covering costs to deliver your product.
Example: If you make $10,000 and your costs are $4,000, your gross margin is 60%.
Contribution Margin by Unit Sold
Remaining money/profit ($) after deducting all variable costs (shipping or manufacturing).
Example: If a product sells for $50 and costs $30 to make, the contribution margin is $20.
CAC Payback Period
How long it takes to recover the cost of acquiring a customer.
Example: If you spent $200 to acquire a customer and they pay you $50/month, it takes 4 months to recover your CAC.
Runway With Projected Burn
How long your cash will last based on current & projected burn rate.
Example: If your current burn is $50,000 but you project $60,000 soon, your runway reduces accordingly.
Net Revenue Retention (NRR)
The percentage of recurring revenue retained after accounting for upgrades, downgrades, and churn.
Example: If customers who paid $10,000 last year now pay $9,000, your NRR is 90%.
Product-Market Fit Indicator
Metrics showing that your product meets market demand. Indicators include high clv:cac ratio, high retention, low burn rate and consistent growth in user engagement, paying customers, and word of mouth.
Series B (Everything in Series A, plus below ones)
Series B focuses on scaling efficiently. Investors look for metrics that reflect operational efficiency and the ability to sustain growth.
Burn Multiple
How much cash you burn to generate $1 of new revenue. It = Net Burn / Net New ARR.
Example: If you burn $300,000 and add $100,000 in ARR, your burn multiple is 3.
Rule of 40
The sum of your revenue growth rate and profit margin should equal or exceed 40%.
Example: 30% growth + 10% profit margin = Rule of 40 is met.
Upsell / Expansion Rate
The percentage increase in revenue from existing customers over time.
Example: Customers spending $10,000 last year now spend $12,000, represents a 20% increase in upsell.
Sales Pipeline Velocity
How fast deals move through your sales process (speed) and their total value.
Example: If your pipeline is worth $1 million, and takes 2 months to close, that’s a high velocity.
Customer Segmentation By Revenue
Average LTV per Customer for Each Segment - Breaking customers into groups based on how much revenue they bring in.
Example: If SMBs pay $500/month and Enterprises pay $5,000, you’ve segmented them.
LTV-to-CAC Ratio
How much a customer is worth (CLV) compared to how much it costs (CAC) to acquire them.
An ideal LTV:CAC or 3:1 ratio indicates a strong Product-Market Fit.
Example: If your CLTV is $1,000 and CAC is $250, your LTV:CAC ratio is 4:1.
Sales Efficiency
How much new revenue you generate for every dollar spent on sales and marketing.
Sales Efficiency = Gross New Revenue / Total Expenses on Sales and Marketing.
Example: If you spend $100,000 and make $200,000 in new revenue, your sales efficiency is 2.
Magic Number
Measures how well you turn sales and marketing costs into recurring revenue growth.
Example: If you spend $50,000 and increase ARR by $100,000, your Magic Number is 2.
Net Promoter Score (NPS)
A metric used to gauge customer satisfaction and loyalty.
NPS score above 50 is considered excellent, as satisfied customers are more likely to stay and refer others, contributing to significant growth.
Remember, each VC cares differently about metrics.
Summary
Metrics are the language of fundraising. They allow you to communicate your startup’s performance, growth potential, and operational efficiency in a way that resonates with investors. By mastering these numbers, you show investors that you’re not just a visionary - you’re a data-driven leader who understands what it takes to scale successfully.
Remember, investors don’t just invest in ideas; they invest in execution. Strong, well-documented metrics demonstrate your ability to measure progress and deliver results. Knowing these metrics by heart will give you the confidence to make a lasting impression and secure the funding you need to grow.
Refined content of Jonathan Crowder, The Key Metrics You Need to know for Fundraising.
Content updated on 2-Jan-2025.
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