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    VC Matrix

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    virurids
    This document discusses 10 common metrics that VCs analyze for startups: 1) MRR/ARR - Monthly/Annual Recurring Revenue which measures predictable recurring income. 2) ACV/ARPU - Average Contract Value/Average Revenue Per User, with ACV more common for B2B. 3) CAC - Customer Acquisition Cost, measuring cost to acquire new customers. 4) LTV - Lifetime Value, reflecting expected revenue from customers over their lifetime. 5) CAC Payback - How long to recoup CAC investment from a new customer. 6) Churn - Lost recurring revenue or users who were once active.

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    VC Matrix

    Uploaded by

    virurids
    46 views35 pages
    This document discusses 10 common metrics that VCs analyze for startups: 1) MRR/ARR - Monthly/Annual Recurring Revenue which measures predictable recurring income. 2) ACV/ARPU - Average Contract Value/Average Revenue Per User, with ACV more common for B2B. 3) CAC - Customer Acquisition Cost, measuring cost to acquire new customers. 4) LTV - Lifetime Value, reflecting expected revenue from customers over their lifetime. 5) CAC Payback - How long to recoup CAC investment from a new customer. 6) Churn - Lost recurring revenue or users who were once active.

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    This document discusses 10 common metrics that VCs analyze for startups: 1) MRR/ARR - Monthly/Annual Recurring Revenue which measures predictable recurring income. 2) ACV/ARPU - Average Contract Value/Average Revenue Per User, with ACV more common for B2B. 3) CAC - Customer Acquisition Cost, measuring cost to acquire new customers. 4) LTV - Lifetime Value, reflecting expected revenue from customers over their lifetime. 5) CAC Payback - How long to recoup CAC investment from a new customer. 6) Churn - Lost recurring revenue or users who were once active.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    46 views35 pages

    VC Matrix

    Uploaded by

    virurids
    This document discusses 10 common metrics that VCs analyze for startups: 1) MRR/ARR - Monthly/Annual Recurring Revenue which measures predictable recurring income. 2) ACV/ARPU - Average Contract Value/Average Revenue Per User, with ACV more common for B2B. 3) CAC - Customer Acquisition Cost, measuring cost to acquire new customers. 4) LTV - Lifetime Value, reflecting expected revenue from customers over their lifetime. 5) CAC Payback - How long to recoup CAC investment from a new customer. 6) Churn - Lost recurring revenue or users who were once active.

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    You are on page 1of 35

    10

    Top
    VC Metrics

    Josh Aharonoff
    Helping Founders Scale with Proper
    Finance & Accounting

    Swipe
    About
    this guide

    In this guide

    you’ll learn about the 10 most


    common metrics that VCs
    analyze with startups, and how
    to calculate them

    Josh Aharonoff

    Top 10 VC Metrics 2
    Contents

    1 MRR / ARR 4

    2 ACV / ARPU 8

    3 CAC 11

    4 LTV 14

    5 CAC Payback 17

    6 Churn 19

    7 Net Dollar Retention 22

    8 Cash Burn 25

    9 Expansion / Contraction 28

    10 Sales Quota Attainment 31

    Josh Aharonoff

    Top 10 VC Metrics 3
    1
    MRR /
    ARR
    Josh Aharonoff Swipe

    4
    1 MRR /
    ARR

    MRR ARR

    Monthly Annual
    Recurring Recurring
    Revenue Revenue

    Josh Aharonoff

    Top 10 VC Metrics - MRR & ARR 5


    The key
    word here is

    RECURRING

    Setup fees are not


    included, as they
    are not recurring

    Josh Aharonoff

    Top 10 VC Metrics - MRR & ARR 6


    Investors love
    startups with recurring
    revenue

    high predictability

    low churn

    Josh Aharonoff

    Top 10 VC Metrics - MRR & ARR 7


    2
    ACV /
    ARPU
    Josh Aharonoff Swipe

    8
    2 ACV /
    ARPU

    ACV ARPU

    Average Average
    Contract Revenue
    Value per User

    Josh Aharonoff

    Top 10 VC Metrics - ACV / ARPU 9


    ACV
    Is more common
    for B2B startups

    ARPU
    is more common
    for B2C startups

    Josh Aharonoff

    Top 10 VC Metrics - ACV / ARPU 10


    3
    CAC

    Josh Aharonoff Swipe

    11
    3 CAC

    CAC

    Customer
    Acquisition
    Cost

    Josh Aharonoff

    Top 10 VC Metrics - CAC 12


    & M arketing
    Sales
    Exp ens e

    new u ser s
    acquire d

    This shows how much it costs


    to acquire a new customer

    This is a very popular metric!

    Josh Aharonoff

    Top 10 VC Metrics - CAC 13


    4
    LTV

    Josh Aharonoff Swipe

    14
    4 LTV

    LTV

    Lifetime
    Value

    Josh Aharonoff

    Top 10 VC Metrics - LTV 15


    This reflects the average
    amount that you can expect
    from a customer over their
    lifetime.

    This can be challenging to


    calculate in the early stages
    of monetization, since there
    is little data to support the
    calculation.

    Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

    Josh Aharonoff

    Top 10 VC Metrics - LTV 16


    5
    CAC
    Payback
    Josh Aharonoff Swipe

    17
    CAC

    New MRR

    This shows how long it


    takes to make back the money

    that you invested to acquire


    a new customer

    Josh Aharonoff

    Top 10 VC Metrics - CAC Payback 18


    6
    Churn

    Josh Aharonoff Swipe

    19
    6 Churn

    Churn reflects

    The amount of lost


    bookings, or users, who
    were once active

    Josh Aharonoff

    Top 10 VC Metrics - Churn 20


    Lost MRR / ARR

    ning MRR / ARR


    Ope

    Churn is the antithesis to growth, and


    must be monitored regularly!

    EX.
    lost $40,000 for an existing
    recurring customer contract

    Josh Aharonoff

    Top 10 VC Metrics - Churn 21


    7
    Net Dollar
    Retention

    Josh Aharonoff Swipe

    22
    7 Net Dollar
    Retention

    M RR / AR R fo r a
    Ending / co h ort
    cific cu sto m er
    spe

    ning MRR / ARR


    Ope

    Josh Aharonoff

    Top 10 VC Metrics - Net Dollar Retention 23


    Net Dollar Retention helps a
    company understand how
    much contract value is being
    retained over a specific period
    of time

    A Net Dollar Retention greater


    than 100% means that
    customers have expanded
    their contract value, while a
    Net Dollar Retention less than
    100% means they have
    contracted, or churned

    Josh Aharonoff

    Top 10 VC Metrics - Net Dollar Retention 24


    8
    Cash
    Burn
    Josh Aharonoff Swipe

    25
    8 Cash
    Burn

    fr om operating
    Cash
    activit ies

    f ro m investing
    Cas h
    activ iti es
    ncing activit)
    ies
    (not fina

    Josh Aharonoff

    Top 10 VC Metrics - Cash Burn 26


    Cash burn reflects the net
    amount of money you are
    consuming to operate your
    business

    It does NOT reflect activity


    from financing events, like
    fundraising, or debt

    Josh Aharonoff

    Top 10 VC Metrics - Cash Burn 27


    9
    Expansion /
    Contraction

    Josh Aharonoff Swipe

    28
    9 Expansion /
    Contraction

    Expansion /
    Contraction is
    a measure of
    incremental
    bookings from
    existing
    customers

    Josh Aharonoff

    Top 10 VC Metrics - Expansion / Contraction 29


    Expansion

    Increased MRR / ARR bookings


    from existing customers

    Opening MRR / ARR

    Contraction

    Decrease d M R R / ARR bookings


    from existing customers

    Opening MRR / ARR

    Expansion MRR / ARR is often times an


    important strategy in “Land & Expand”
    campaigns

    Josh Aharonoff

    Top 10 VC Metrics - Expansion / Contraction 30


    10
    Sales Quota
    Attainment

    Josh Aharonoff Swipe

    31
    10 Sales Quota
    Attainment

    fr om a sa les rep
    Bo ok in gs
    up of s ale s r ep s
    or gro

    a for the period


    Quot

    Josh Aharonoff

    Top 10 VC Metrics - Sales Quota Attainment 32


    Sales reps are a common
    method for acquiring
    customers with B2B SaaS

    Sales Quota
    Attainment shows
    how well these sales
    reps are performing
    against their quota.

    $ 800k

    Sales Reps $1M Annual Quota

    Josh Aharonoff

    Top 10 VC Metrics - Sales Quota Attainment 33


    Thanks for
    reading!
    Did you enjoy this content?
    Do you have anything to add?
    Questions?

    34
    Author

    Josh
    Aharonoff

    I help startups Scale their Finance &


    Accounting with amazing reporting
    & financial operations

    Find out why over 40 startups


    trust me each month:

    https://www.mightydigits.com/book-meeting

    + Follow me on Linkedin for more Startup Finance & Accounting tips

    Josh Aharonoff

    Top 10 VC Metrics 35

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