The Metrics that Matter
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The document outlines essential metrics for startups raising capital, emphasizing growth rates, burn rates, retention measures, and sales efficiencies. It highlights best-in-class benchmarks for various stages and categories, while stressing the interconnectedness of metrics and the importance of having a thoughtful action plan for improvement. Additionally, it encourages the inclusion of company-specific metrics and cautions against relying on cumulative data.
![Burn
● How much should I be burning?
• Hyper-technical products
are held to different burn
standards
• Especially in today’s market,
line of sight to 20-30% FCF
long term is the goal
TIP
Best-in-Class
Net New ARR / Burn >1
Cash Runway [Months] 24 months*
*in today’s market](https://image.slidesharecdn.com/wednesday1100amthemetricsthatmatterfinal-220609153554-9420a1e1/85/The-Metrics-that-Matter-4-320.jpg)
The Metrics that Matter
- 1. MOLLY ALTER Partner Index Ventures @molly_alter The Metrics that Matter Whether You Are Raising $1M or $100M
- 2. It’s not just the metrics themselves that matter It’s your command and control that make the difference.
- 3. Growth ● How fast should I be growing? • 1 year from launch to get to $1M ARR is good; 9 months is excellent • After that, triple, triple, double, double, double is best-in-class • Emphasize net new ARR TIP LOGIC REALITY
- 4. Burn ● How much should I be burning? • Hyper-technical products are held to different burn standards • Especially in today’s market, line of sight to 20-30% FCF long term is the goal TIP Best-in-Class Net New ARR / Burn >1 Cash Runway [Months] 24 months* *in today’s market
- 6. Retention ● Which measures of retention should I cite? • Don’t overlook gross $ retention • Use cohort data to your advantage if you’ve had time- stamped changes TIP Best-in-Class SMB Enterprise Logo Retention 65% 85% Gross $ Retention 65% 85% Net $ Retention 100% 130%
- 7. Sales Efficiencies ● Which metrics matter? • Adjust for gross margin in these calculations if you’re below 85% GM • Magic Number is just the inverse of CAC payback months (Magic # of 2.0 implies a 6-month payback period); no need to show both TIP Best-in-Class SMB Enterprise CAC Payback Months 6 months 12 months 3-Year LTV:CAC 3:1 3:1
- 8. The Kitchen Sink ● What about everything else? • Always include company- specific metrics or ratios that your team tracks • Avoid cumulative data TIP Best-in-Class Gross Margin >80% NPS Category-specific ACVs Category-specific
- 9. Key Takeaways Strong metrics typically reflect some sort of “unfair advantage” All metrics are interconnected, and some can supercharge more than others. Nobody has perfect metrics. But knowing where you can improve and having a thoughtful action plan is within your control. 1 2 3
- 11. Thank You
- 12. Join us for the The Diversity, Inclusion & Equality Brunch 11:45 AM - 12:30 PM Speakers We Love: Stage B P2: Banquet Hall
- 13. Appendix Sources: Index internal data, Tomasz Tunguz, Alex Clayton, Signalfire, Bessemer, Point9 Saas Napkin, Insight Periodic Table of SaaS
Editor's Notes
- #14: Sources: Index data, Signalfire, Bessemer, Point9 Saas Napkin, Insight Periodic Table of SaaS