startup-metrics-framework

Calculate LTV as ARPU multiplied by gross margin percentage and the inverse of churn rate, then divide by CAC (total sales and marketing spend divided by new customers acquired). A ratio above 3.0 is considered healthy, while below 1.0 is unsustainable.

Seed-stage startups should focus on MRR growth rate of 15-20% month-over-month, baseline CAC and LTV, gross retention above 85%, and core product engagement. Start tracking burn rate, runway, and sales efficiency at this stage.

Burn multiple is net burn divided by net new ARR, and lower is better. Below 1.0 is exceptional, 1.0-1.5 is good, 1.5-2.0 is acceptable, and above 2.0 indicates inefficient spending relative to revenue growth.

NDR equals starting ARR plus expansion minus contraction and churn, divided by starting ARR. Above 120% is best-in-class, 100-120% is good, and below 100% signals retention problems that need attention.

Series A investors expect ARR with 3-5x year-over-year growth, CAC payback under 18 months, LTV:CAC above 3.0, net dollar retention above 100%, and burn multiple below 2.0.

At pre-seed stage, prioritize active user growth, Day 7 and Day 30 retention, engagement, and qualitative feedback instead. Revenue, CAC optimization, and unit economics become relevant once you reach seed stage with early traction.