Top Metrics VCs Want to See Before Funding (With Data Proof)

Securing venture capital isn’t just about having a great idea. It’s about proving, with hard data, that your business is worth betting on. While a compelling story and a strong team matter, what gets a VC’s attention—and their investment—is your numbers. But not just any numbers. Venture capitalists look for specific metrics that show traction, efficiency, and the potential for long-term growth.

1. Monthly Recurring Revenue (MRR) Growth Rate

What It Is

MRR growth rate measures how quickly your predictable revenue is growing month over month. It’s a critical metric for SaaS businesses and any startup with a recurring billing model. Investors love it because it shows momentum.

Why It Matters

A fast-growing MRR tells VCs that people are not only buying your product—they’re doing it regularly, and more people are doing it each month. A common benchmark that signals strong early-stage performance is 15% to 20% MRR growth per month.

This kind of growth, sustained over time, leads to serious compounding. A $10,000 MRR can become $20,000 in a few months—and $50,000 not long after that.

How to Strengthen Your MRR Growth

1. Track the Right Segments: Don’t just look at total MRR. Break it down—new customer MRR, expansion MRR (from upsells), and churned MRR. This tells you what’s driving your growth and where your leaks are.
2. Tighten Your Onboarding: First impressions matter. A good onboarding experience shortens the time to value, helping new users become paying customers faster. Use emails, in-app messages, and guides to walk users through key actions.
3. Test and Adjust Pricing: Undercharging is common in early-stage startups. Regularly revisit pricing. Introduce value-based tiers that scale as your customers grow.
4. Focus on Customer Success: A proactive success team ensures users keep using your product and renew every month. Follow up on usage drops. Offer help. Guide them to features they aren’t using.
5. Drive Upgrades with Features: Create feature sets that naturally encourage users to upgrade. Think storage limits, integrations, or advanced reporting. Let value pull them up—not sales pressure.

2. Annual Recurring Revenue (ARR)

What It Is

ARR is the big brother of MRR. It’s your monthly recurring revenue multiplied by 12. It gives a clear picture of how much predictable revenue your business generates every year.

Why It Matters

ARR is a shorthand VCs use to understand your traction. Hitting $1 million in ARR is often seen as the “magic number” to raise a strong Series A round. It shows you’re solving a real problem at scale.

More importantly, ARR makes your financial model easier to forecast. That makes you a less risky investment in a VC’s eyes.

How to Grow ARR

1. Offer Annual Contracts: Encourage customers to pay upfront for the year by giving them a slight discount. It improves cash flow and reduces churn.
2. Optimize Expansion Revenue: Make sure customers can grow with you. Offer add-ons or usage-based pricing models that increase as they scale.
3. Prioritize Account Retention: Monitor usage patterns and step in early when engagement drops. Proactive support keeps users from canceling.
4. Align Sales and Marketing: Ensure your messaging targets the right audience—those more likely to stick around and upgrade over time.
5. Streamline Renewals: Make renewing easy. Offer auto-renewal or simplified re-purchase processes. The less friction, the better your ARR retention.

3. Customer Acquisition Cost (CAC)

What It Is

CAC is the average cost to acquire one paying customer. It includes everything—ads, marketing tools, sales team salaries, even content creation. You calculate it by dividing total acquisition spend by the number of new customers.

Why It Matters

A sustainable business spends far less to acquire a customer than it earns from them. That’s where CAC comes in. VCs pay close attention to this metric because a high CAC eats into margins and makes scaling harder.

A CAC that keeps rising while customer numbers stagnate is a red flag. But a low or decreasing CAC? That’s music to an investor’s ears.

How to Lower CAC

1. Identify Top-Performing Channels: Double down on the acquisition channels that bring in the highest quality leads at the lowest cost.
2. Refine Targeting: Better targeting = better leads. Use analytics to find patterns in your highest-LTV customers and build lookalike audiences.
3. Improve Your Funnel: Optimize every stage of your funnel. Is your landing page converting? Is your trial converting to paid at a healthy rate?
4. Invest in Organic Growth: Content marketing and SEO take time but can drastically reduce CAC over the long run.
5. Upsell Early and Often: If you can increase revenue per user, you improve your CAC-to-LTV ratio—even if CAC stays the same.

4. Customer Lifetime Value (LTV)

What It Is

LTV tells you how much revenue a customer will generate during their relationship with your business. It’s a forward-looking number based on historical data—how long customers stick around and how much they spend.

Why It Matters

LTV lets you know how much you can afford to spend to get a customer. Investors use it alongside CAC to see how efficient your business model is.

A common rule: Your LTV should be at least 3 times your CAC. If not, either your customers aren’t sticking around—or you’re overpaying to acquire them.

How to Increase LTV

1. Improve Retention: Churn is the enemy of LTV. Identify why customers leave and fix it—whether it’s poor onboarding, lack of support, or pricing confusion.
2. Upsell and Cross-Sell: Guide customers toward higher-value tiers or complementary products. Timing matters—don’t pitch too early or too late.
3. Boost Product Stickiness: The more core your product becomes to your users’ daily work, the longer they’ll stay. Build must-have features, not nice-to-haves.
4. Offer Training and Support: Empower customers to get the most out of your product. Better results = longer retention = higher LTV.

5. Gross Margin

What It Is

Gross margin is the percent of revenue left after subtracting direct costs of delivering your product. It’s not about profit—it’s about how scalable your product is.

Why It Matters

High gross margins mean more room for marketing, R&D, and hiring. For SaaS, VCs expect 70–90%. For ecommerce, 30–50% is common. Anything lower means your business may struggle to grow efficiently.

How to Improve Gross Margin

1. Automate More: Automate support, onboarding, and product delivery. Every manual process cuts into your margin.
2. Review Hosting Costs: For software, infrastructure costs can pile up. Review servers, third-party APIs, and tools.
3. Use Scalable Architecture: Build systems that handle growth without doubling your costs.
4. Negotiate Supplier Deals: If you ship physical goods, cut costs in production, packaging, and logistics.

6. Burn Rate

What It Is

Burn rate is the amount of money your startup spends each month to keep operating. It includes salaries, tools, rent, marketing, and everything in between. Essentially, it’s how fast you’re “burning” cash.

Why It Matters

Burn rate shows VCs how long your company can survive before needing more funding. A high burn with low growth is a red flag. On the other hand, a modest burn with consistent growth indicates financial discipline and efficient use of capital.

Early-stage startups are often expected to burn cash while growing, but there’s a limit. Most VCs want to see a burn rate that gives you at least 12–18 months of runway.

How to Manage Burn Rate Smartly

1. Forecast Carefully: Use a monthly cash flow model to project how much you’re spending and how long your runway will last. Update it regularly.
2. Cut Non-Essential Costs: Audit your expenses. Eliminate or pause tools and services that aren’t contributing directly to growth or operations.
3. Optimize Team Size: Every new hire should have a clear ROI. Consider freelancers for short-term or non-core work instead of full-time hires.
4. Outsource Selectively: Functions like accounting, HR, or design can often be handled by agencies or contractors to reduce fixed costs.
5. Negotiate Better Terms: Talk to vendors. See if you can get discounts, extend payment terms, or bundle services.
6. Monitor Unit Economics: Burn is acceptable if your unit economics (like CAC vs. LTV) are healthy. Spend smarter, not just less.

7. Runway

What It Is

Runway is the amount of time you have before your company runs out of cash—assuming your current burn rate stays the same. It’s one of the simplest, yet most critical metrics in fundraising conversations.

Why It Matters

Investors don’t want to fund desperation. If your runway is too short, they may see your startup as risky or mismanaged. A 12- to 18-month runway is generally considered safe. It gives you enough time to grow, hit milestones, and prepare for the next round.

How to Extend and Communicate Runway

1. Recalculate Monthly: Don’t rely on old data. Your burn changes, and so should your understanding of your runway.
2. Model Scenarios: What happens if revenue drops? What if you hire more people? Build best-, base-, and worst-case runway projections.
3. Raise Enough: When fundraising, make sure you’re asking for enough to last beyond your next key milestone—not just to survive.
4. Delay Major Expenses: If a large cost isn’t urgent, hold off. Use milestones to unlock future spending.
5. Communicate Confidently: When VCs ask about runway, show them your plan. Have clear spending guidelines tied to growth outcomes.

8. Churn Rate

What It Is

Churn rate measures the percentage of customers (or revenue) lost during a given period—usually monthly. If you start with 100 customers and lose 5, your churn rate is 5%.

There are two kinds: customer churn and revenue churn. Both are critical.

Why It Matters

High churn is like pouring water into a leaky bucket. No matter how great your acquisition strategy is, if users don’t stay, your business can’t scale.

For SaaS startups, VCs generally look for churn rates below 5% per month. Lower is always better, especially as you grow.

How to Reduce Churn

1. Improve Onboarding: Many users leave because they never understand the product. Use guided tutorials, checklists, and personalized welcome flows to help them get started.
2. Track Early Signals: Look for signs of disengagement—missed logins, low feature usage, or dropped sessions. Reach out early.
3. Ask Why They Leave: Send exit surveys or schedule short exit calls. Learn from every churned customer.
4. Engage Continuously: Use emails, in-app nudges, or webinars to keep users informed and motivated.
5. Add Stickiness: Integrate into your customers’ daily workflows. The more they rely on you, the less likely they are to cancel.
6. Review Pricing Fairness: Misaligned pricing drives churn. If users don’t feel they’re getting enough value, they’ll walk away.

9. Retention Rate

What It Is

Retention rate is the flip side of churn. It’s the percentage of customers who stay with you over time. If you retain 95 out of 100 users over a month, your monthly retention rate is 95%.

Why It Matters

VCs love sticky products. A high retention rate proves customers find value in your product and want to keep paying for it. In many cases, high retention can even compensate for slower growth.

For SaaS companies, a retention rate above 90% is strong. For consumer apps, even 30% monthly retention can be impressive depending on the use case.

How to Improve Retention

1. Deliver Quick Wins: Users stick around when they see value quickly. Design your product and onboarding to drive a fast “aha” moment.
2. Understand Usage Patterns: Use analytics tools to understand what features correlate with long-term retention. Make those features central.
3. Invest in Customer Support: Fast, friendly help keeps customers happy. Live chat, detailed help docs, and proactive outreach make a difference.
4. Send Value Reminders: Regular updates, tips, or progress reports can remind users why they signed up in the first place.
5. Create a Community: Users stay longer when they feel part of something. Whether it’s a Facebook group or monthly webinar, build belonging.

10. Net Revenue Retention (NRR)

What It Is

Net Revenue Retention (NRR) shows how much revenue you retain and expand from existing customers over time. It factors in upgrades, downgrades, and churn.

If you start with $100K revenue from a customer cohort and earn $120K from them a year later (due to upsells and expansion), your NRR is 120%.

Why It Matters

An NRR over 100% means your existing customers are not only sticking around—they’re spending more. That’s a strong sign of product-market fit and scalability. For enterprise SaaS, 110%–130% NRR is excellent.

VCs love this metric because it shows you can grow without acquiring new customers.

How to Boost NRR

1. Design Upgrade Paths: Offer clear, easy-to-understand upgrade options. Let users grow into higher tiers naturally.
2. Use Data to Drive Expansion: Recommend features or usage upgrades based on customer behavior.
3. Train Your Team to Upsell: Make account managers or customer success reps responsible for identifying upsell opportunities—not just preventing churn.
4. Build Value Over Time: Regularly release new features or improvements that customers are willing to pay more for.
5. Track Downgrades Too: Prevent customers from downgrading by proactively offering support or customized options.

11. Gross Revenue Retention (GRR)

What It Is

Gross Revenue Retention (GRR) is a measure of how much revenue you keep from existing customers over a set time period—usually a year—without counting upgrades or expansion. It looks strictly at losses from churn and downgrades.

If you had $100,000 in revenue from a customer group and lost $15,000 due to churn or downgrades, your GRR is 85%.

Why It Matters

GRR is all about stability. It answers this question: “How much recurring revenue do you lose without factoring in growth?” A healthy GRR means your business has a solid foundation. For SaaS, VCs typically expect 80–90% GRR at minimum. The higher, the better.

Unlike NRR, this metric doesn’t let you hide churn behind upsells.

How to Improve GRR

1. Double Down on Retention Drivers: Track which customer behaviors and features correlate with long-term retention. Promote those behaviors early.
2. Fix Product Gaps: Listen to churn feedback. Are there missing features, usability issues, or technical bugs that are pushing customers away?
3. Offer Save Plans: If customers want to cancel or downgrade, provide a pause plan, discount, or personalized demo to retain them.
4. Revisit Customer Fit: Not all churn is bad—but acquiring the wrong customers in the first place hurts GRR. Tighten your targeting and qualification criteria.
5. Create Customer Playbooks: For your most valuable segments, build proactive playbooks to guide them through success milestones and reduce churn risk.

12. Payback Period (CAC Payback)

What It Is

Payback period is how long it takes to earn back your Customer Acquisition Cost (CAC). If you spend $500 to acquire a user, and that user pays you $100 per month, your CAC payback period is five months.

Why It Matters

VCs prefer companies with short payback periods—ideally under 12 months. A short payback means your investment in growth returns quickly and can be reinvested to fuel faster scaling. Long payback times signal risk and capital inefficiency.

How to Shrink Your Payback Period

1. Increase Average Deal Size: Can you increase the number of seats sold? Add onboarding packages? Premium support? A higher ticket price shortens the payback instantly.
2. Drive Faster Conversions: Speed up the trial-to-paid journey with better onboarding, faster follow-ups, and frictionless checkout flows.
3. Charge Annually: Offer discounts for annual billing. It gives you revenue upfront and drastically shortens the time to recover CAC.
4. Optimize CAC: Review spend. Are you wasting budget on expensive, low-quality leads? Cut them and focus on what works.
5. Reduce Discounts: Discounting can be useful, but overdoing it means a longer payback window. Keep offers tight and tied to real value.

13. Average Revenue Per User (ARPU)

What It Is

ARPU tells you how much revenue you earn from each active customer in a given time period—usually per month. You calculate it by dividing total recurring revenue by the number of active paying users.

Why It Matters

ARPU helps investors understand your pricing power and the value you’re delivering. It also shows your growth path—are users spending more over time?

For example, two companies might have $100,000 MRR, but one has 10,000 users and the other just 500. Their ARPUs would be $10 and $200 respectively—very different business models.

How to Grow ARPU

1. Introduce Higher Tiers: Many users want more from your product. Add advanced tiers with better functionality and support.
2. Bundle Add-Ons: Offer value packs—analytics, integrations, or services—that enhance the core experience and justify a higher spend.
3. Monitor Usage Trends: Find power users and understand what they value. Use those insights to develop premium offerings.
4. Anchor Pricing Strategically: Use a high-value tier as a pricing anchor to make your mid-tier offer feel like a better deal. This nudges more customers toward higher ARPU plans.
5. Remove Low-Value Plans Over Time: If old legacy plans are underpriced and no longer fit your value model, consider sunsetting them with care.

14. Daily Active Users / Monthly Active Users (DAU/MAU)

What It Is

The DAU/MAU ratio shows the stickiness of your product. It measures how many monthly users return every day. For example, if you have 10,000 monthly users and 2,500 daily users, your DAU/MAU is 25%.

Why It Matters

This ratio is often used by VCs to measure engagement. A DAU/MAU ratio above 20% is usually a strong indicator of daily habit formation—especially for apps and platforms. The higher the percentage, the more “essential” your product feels.

How to Increase DAU/MAU

1. Build Usage Habits: Design your product to become a daily routine. Think reminders, daily tasks, or usage triggers.
2. Send Smart Nudges: Use in-app messages, push notifications, or emails to re-engage inactive users—but make sure they’re helpful, not spammy.
3. Track and Celebrate Milestones: Use gamification or personal achievements to encourage repeat engagement.
4. Offer Fresh Content or Data: Keep your product dynamic. Whether it’s new insights, daily tips, or refreshed dashboards, give users a reason to come back.
5. Minimize Friction: The fewer steps it takes to get value, the more likely users are to return. Simplify login, navigation, and core workflows.

15. User Growth Rate

What It Is

User growth rate measures how fast your total user base is expanding over time. Usually tracked monthly, it’s calculated as the percentage increase in total users compared to the previous month.

Why It Matters

VCs are in the business of scaling. A high user growth rate shows that the market wants what you’re offering. It’s often the first sign of product-market fit, even before monetization kicks in.

Early-stage startups that grow users 10–20% month-over-month catch attention quickly.

How to Accelerate User Growth

1. Leverage Virality: Build in sharing mechanisms. Give users reasons to invite others—whether through collaboration, rewards, or utility.
2. Run Targeted Campaigns: Find the marketing channels where your audience hangs out. Use personalized campaigns that speak directly to their pain points.
3. Lower Onboarding Barriers: If your signup process is long or confusing, fix it. Simplicity drives growth.
4. Offer Free Trials or Freemium: Let users experience value without risk. It widens the top of the funnel and increases trial adoption.
5. Turn Customers Into Ambassadors: Set up referral programs. Encourage word-of-mouth with incentives or recognition.

16. Conversion Rate (Free to Paid)

What It Is

Conversion rate in this context refers to the percentage of users who move from using your product for free (trial or freemium) to becoming paying customers. If 1,000 users start a trial and 50 end up paying, your conversion rate is 5%.

Why It Matters

A high free-to-paid conversion rate shows that users clearly see the value of your product. It means your offering solves a real problem, and the onboarding experience is strong. For VCs, this metric signals product-market fit and a scalable growth engine.

Typical SaaS conversion rates range from 2% to 5%. Higher than that? You’re doing something very right.

How to Improve Conversion Rate

1. Shorten Time to Value: Help users achieve that first “aha” moment quickly. Remove friction. Show results fast—ideally within the first session.
2. Offer Guided Onboarding: Don’t drop new users into a blank screen. Use product tours, setup checklists, and human support where needed.
3. Use Smart Email Flows: Triggered onboarding emails can nudge users back in, suggest next steps, and reinforce the value of going paid.
4. Limit the Free Plan Wisely: Your free tier should be generous enough to give users a taste—but not so generous that they never feel the need to upgrade.
5. Display Social Proof: Show how others in their industry use and benefit from your paid plans. Testimonials, logos, or even use-case libraries can make a difference.

17. Market Size (TAM/SAM/SOM)

What It Is

Market size helps define your startup’s ceiling. It’s typically broken into three parts:

• TAM: Total Available Market – if everyone in the world who could buy your product did.
• SAM: Serviceable Available Market – the portion of TAM your product can realistically serve.
• SOM: Serviceable Obtainable Market – the slice of SAM you can capture in the short term, given your resources.

Why It Matters

Even if you’re growing quickly, VCs need to know how big the prize is. A business that could capture just 2% of a $10B market is far more exciting than one that might dominate a $50M niche.

The rule of thumb: VCs want to see TAMs of $1B+—at minimum. It means there’s room to grow and multiple paths to scaling.

How to Present Market Size Well

1. Use Bottom-Up Calculations: Start with how many potential customers exist, then multiply by what they’d pay. This is more credible than vague top-down numbers.
2. Segment Clearly: Break your market into sub-segments by industry, geography, or use case. It shows strategic thinking.
3. Show Momentum in SOM: Even if your TAM is huge, VCs care about your short-term traction. Focus on where you’re winning now and why.
4. Benchmark Against Competitors: Show how others have grown in similar markets. It helps VCs believe in your path.
5. Avoid Fluff: Avoid saying “our product is for everyone.” Narrow and specific is more persuasive than broad and vague.

18. Number of Paying Customers

What It Is

This is a straightforward metric: how many individual or business accounts are currently paying for your product or service.

Why It Matters

VCs want to see that people are not only interested in your product but are also willing to pay for it. The number of paying customers is often used to gauge traction, growth velocity, and customer demand.

For B2B SaaS at the seed stage, having 100+ paying customers is a solid milestone that shows you’re beyond the idea phase.

How to Grow Your Paying Customer Base

1. Identify Low-Hanging Opportunities: Are there free users who’ve been active for months? Reach out and guide them toward the value of going paid.
2. Tighten Qualification Criteria: Focus your sales and marketing on the personas most likely to convert. Quality over quantity.
3. Offer Trials with a Deadline: Time-bound trials create urgency and help users make decisions faster.
4. Make Upgrading Seamless: Reduce checkout steps. Offer multiple payment options. Remove any friction between “yes” and “done.”
5. Collect and Use Objections: When users hesitate, ask why. Turn objections into fuel for improving your pricing, positioning, or product.

19. Revenue Growth YoY

What It Is

Year-over-Year (YoY) revenue growth shows how much your revenue has increased (or decreased) compared to the same time last year. It’s a key long-term signal of business health.

If you made $200K last year and $800K this year, your YoY growth is 300%.

Why It Matters

VCs are looking for businesses that grow fast. For early-stage startups, 200% to 400% YoY growth is a strong signal of momentum and potential market dominance. Growth shows product-market fit, successful go-to-market strategies, and scalability.

How to Sustain High YoY Growth

1. Invest in Scalable Channels: Content, partnerships, and paid ads can all scale with the right team and systems.
2. Expand Customer Base: Move into new verticals, regions, or user segments where your product already has strong product-market fit.
3. Launch New Revenue Streams: Think add-on products, upgraded plans, or usage-based pricing layers.
4. Strengthen Retention: More revenue from the same customers—via renewals or upsells—adds to growth without new acquisition costs.
5. Set and Hit Milestones: Break annual growth into monthly targets. Celebrate wins. Adjust quickly when falling short.

20. Founders’ Equity Stake

What It Is

This refers to the percentage of the company still owned by the founding team after previous funding rounds and option grants.

Why It Matters

VCs want founders to be highly motivated—and significant equity is the best motivator. If the founding team owns too little too early, it raises concerns about alignment and control.

Most VCs want to see founders still holding at least 60% equity post-seed and around 40–50% by Series A.

How to Protect Founders’ Equity

1. Raise Only What You Need: Don’t take on large early rounds that force heavy dilution. Be disciplined and raise based on clear milestones.
2. Negotiate Terms Carefully: Not all capital is equal. Favor clean term sheets over “creative” structures that might seem founder-friendly but chip away equity long-term.
3. Avoid Over-Issuing Options: Be conservative with early equity grants. Use vesting and cliffs to ensure alignment with long-term contributors.
4. Capitalize on Traction: The more proof you have—revenue, growth, retention—the better your negotiation power in preserving equity.
5. Be Transparent with Future Rounds: Forecast what future dilution might look like. Plan cap table scenarios to avoid unexpected surprises.

21. Team Composition (Tech vs. Biz)

What It Is

Team composition refers to the balance of skills, experience, and roles within your founding and early team. VCs typically look for a blend of technical and business talent—ideally, one founder who can build the product and another who can sell it.

A startup that’s all engineering or all sales without balance often struggles to execute across the board.

Why It Matters

Your team is your execution engine. A well-balanced team increases your chances of adapting, scaling, and solving complex challenges. Investors want to see complementary skill sets, a clear division of responsibilities, and proof that your team can go the distance.

They’re not just backing your idea—they’re backing your ability to deliver.

How to Strengthen Team Composition

1. Fill Core Gaps Early: If you’re a solo founder with a tech background, find a co-founder or early hire who can handle growth, fundraising, or operations. If you’re from a business background, consider bringing in a strong technical lead or co-founder.
2. Define Roles Clearly: Avoid overlapping responsibilities. Make it clear who owns product, growth, marketing, engineering, etc. This helps avoid confusion and ensures accountability.
3. Hire for Grit and Learning: At the earliest stages, the ability to learn fast and adapt is more important than polished resumes. Look for curious, self-motivated team players.
4. Build a Culture of Ownership: Give your early team members the chance to lead, experiment, and own key parts of the business. It fosters loyalty and accelerates growth.
5. Show Off Your Chemistry: VCs love to see founders who work well together and complement each other’s strengths. Be honest about your differences and how you resolve disagreements.

22. Product-Market Fit Score (Sean Ellis Test)

What It Is

This metric is based on a simple but powerful survey question popularized by Sean Ellis: “How would you feel if you could no longer use this product?” If at least 40% of users say they’d be “very disappointed,” it indicates strong product-market fit.

Why It Matters

Product-market fit is the foundation of startup growth. Without it, every marketing or sales effort is just spinning wheels. VCs use this score as a proxy for customer love and potential virality.

It’s also an easy way to validate your early-stage traction—especially before revenue becomes meaningful.

How to Improve Your Product-Market Fit Score

1. Ask the Right Users: Don’t just blast this question to all users. Target engaged users who’ve had enough time to experience your product.
2. Analyze Open-Ended Responses: Follow up the key question with “Why?” or “What would you miss the most?” The answers reveal what people truly value—and what to improve.
3. Prioritize Core Use Cases: Focus development on the features people would miss the most. Make them even better.
4. Fix Weak Onboarding: Users who don’t understand your product won’t fall in love with it. Make sure they reach their “aha” moment quickly and easily.
5. Nurture Power Users: These are your champions. Engage them in feedback loops, build community, and reward their advocacy.

23. Monthly Active Users (MAUs)

What It Is

Monthly Active Users refers to the number of unique users who engage with your product at least once during a 30-day period. It’s a standard engagement metric used across industries—especially in apps and platforms.

Why It Matters

MAUs show how many people find your product useful enough to keep coming back. It gives VCs a sense of your reach, relevance, and overall user health. An upward trend in MAUs is a sign of traction and growing mindshare.

When paired with metrics like DAU/MAU or conversion rate, MAUs paint a fuller picture of product stickiness and value.

How to Grow MAUs

1. Reduce Barriers to Entry: Make signup and re-engagement easy. Offer single sign-on, save user progress, and minimize onboarding friction.
2. Stay Top of Mind: Use emails, notifications, and even browser push alerts to keep users engaged and remind them of your value.
3. Give People a Reason to Return: Update content regularly, introduce weekly or monthly challenges, and personalize dashboards to make return visits more compelling.
4. Track Inactivity Triggers: Reach out before users churn. If someone hasn’t logged in for 2 weeks, nudge them with something new or helpful.
5. Invest in Product Quality: Users return to products that are reliable, fast, and enjoyable. Constantly squash bugs and improve UI/UX.

24. Sales Cycle Length

What It Is

Sales cycle length refers to the average time it takes from first contact with a lead to closing the sale. It’s often measured in days and can vary widely depending on your customer type—SMB, mid-market, or enterprise.

Why It Matters

A short sales cycle means faster revenue, more predictable growth, and lower customer acquisition costs. VCs prefer businesses that can close deals efficiently because it signals product clarity, pricing fit, and operational focus.

For small businesses, <30 days is good. For enterprise, <90 days is considered healthy.

How to Shorten the Sales Cycle

1. Qualify Leads Early: Don’t spend time selling to the wrong people. Make sure your inbound leads match your ideal customer profile.
2. Simplify Pricing and Plans: Confusing pricing slows decisions. Be transparent, and offer clear value comparisons between tiers.
3. Build Sales Enablement Content: Create demo videos, case studies, ROI calculators, and objection-handling docs to speed up decision-making.
4. Automate Follow-Ups: Use CRMs to schedule reminders, track touchpoints, and nudge leads consistently without manual labor.
5. Create Urgency: Time-limited offers, bonuses, or seats can push indecisive leads over the line—when done respectfully.

25. Gross Booking Value (GBV)

What It Is

Gross Booking Value represents the total dollar amount flowing through your platform, regardless of how much revenue you actually take home. It’s a common metric for marketplaces and transaction-based platforms.

For example, if your marketplace processes $5 million worth of transactions in a year—even if you keep only 10%—your GBV is $5 million.

Why It Matters

GBV shows scale. It gives VCs a sense of how much economic activity your platform enables, which is often more relevant early on than direct revenue. A growing GBV indicates growing user trust, utility, and reach.

$10M+ in annual GBV is a good sign of traction for seed-stage marketplaces.

How to Increase GBV

1. Drive More Transactions: Focus on frequency, not just new users. Help existing users transact more often by smoothing logistics, payments, or discovery.
2. Expand Inventory or Supply: The more options your platform offers (sellers, listings, items), the more transactions you can generate.
3. Offer New Use Cases: Introduce features that support new types of transactions or customer segments.
4. Remove Friction: Simplify search, payment, communication, and fulfillment. Every improvement increases the likelihood of a successful booking.
5. Build Trust with Ratings and Guarantees: Reducing buyer hesitation leads to more completed purchases—and more GBV.

26. Take Rate

What It Is

Take rate is the percentage of each transaction that your platform keeps as revenue. If your marketplace facilitates $1,000 in bookings and you collect $150, your take rate is 15%.

Why It Matters

This metric is essential for marketplaces and platforms. It reflects how efficiently you’re monetizing your ecosystem. A healthy take rate ensures that high Gross Booking Value (GBV) actually translates into usable revenue.

Typical take rates vary:

• 10–15% is common for services marketplaces.
• 20–30% is possible in high-margin or niche verticals (like education or expert consulting).

How to Optimize Your Take Rate

1. Deliver Real Value: If your platform saves time, increases earnings, or adds convenience, users are more willing to pay a higher cut.
2. Test Pricing Models: Flat fees, tiered commissions, or hybrid models (with subscriptions) can create better alignment with your users.
3. Avoid Early Overcharging: Start with a modest take rate, then increase as you build loyalty and demonstrate value.
4. Offer Premium Features: Consider an optional higher take rate in exchange for better visibility, faster payouts, or enhanced support.
5. Educate Your Users: Be transparent. Show users how the take rate supports customer acquisition, platform maintenance, and growth.

27. Capital Efficiency (Revenue / Capital Raised)

What It Is

Capital efficiency is how much revenue you’ve generated compared to how much money you’ve raised. For example, if you’ve raised $1M and your business generates $2M in revenue, your capital efficiency ratio is 2:1.

Why It Matters

VCs care about this metric because it reflects how wisely you’re using investor money. A company that can do more with less is usually a safer, smarter bet.

Capital efficiency becomes especially important in down markets, where capital is harder to raise and expectations around profitability are higher.

How to Improve Capital Efficiency

1. Set Clear ROI Targets: Every dollar you spend should have a measurable outcome. Avoid vanity metrics.
2. Bootstrap When Possible: Delay raising capital until absolutely necessary. Early revenue makes your valuation stronger and your business more attractive.
3. Avoid Over-Hiring Early: Small, focused teams can move fast and stay lean. Avoid bloated headcount before reaching product-market fit.
4. Cut Back on “Nice to Haves”: Focus spending on activities that directly drive growth or retention. Delay brand projects or fancy perks.
5. Track Revenue per Employee: This is a helpful internal benchmark. If revenue doesn’t keep up with team size, reassess your structure.

28. Referral Rate / Virality Coefficient

What It Is

The referral rate measures how many of your users are inviting others to try your product. The virality coefficient goes a step further—it tells you how many new users each current user brings in.

If every 10 users invite 5 new ones, your coefficient is 0.5. A coefficient above 1.0 means your user base is growing on its own—without paid acquisition.

Why It Matters

This is the holy grail for VCs. A startup with built-in virality grows exponentially with little marketing spend. Products like Dropbox, Slack, and Zoom became household names this way.

Even small levels of virality, combined with paid acquisition, drastically reduce CAC.

How to Boost Referral Rate and Virality

1. Make Sharing Native: Don’t make users hunt for a referral button. Put it front and center in moments of delight—after onboarding, successful actions, or wins.
2. Offer a Clear Incentive: Double-sided rewards (like credits or premium features) often work better than one-sided deals.
3. Use “Powered By” Branding: If you’re a collaborative tool or embeddable widget, brand it. This creates natural exposure to new users.
4. Track and A/B Test Copy: The words you use to prompt sharing matter. Test multiple referral messages, subject lines, and button labels.
5. Measure and Celebrate Top Referrers: Highlight power users. Offer leaderboards, perks, or shoutouts to reinforce behavior.

29. Customer Satisfaction (NPS Score)

What It Is

NPS stands for Net Promoter Score. It asks customers, “How likely are you to recommend our product to a friend or colleague?” on a scale of 0 to 10. Promoters (9–10) are loyal fans. Detractors (0–6) are unhappy. NPS = % of Promoters – % of Detractors.

A score above 50 is considered excellent. For SaaS companies, anything 30+ is solid.

Why It Matters

NPS gives you a snapshot of how customers feel. A high score shows strong product love and predicts organic growth through word-of-mouth.

VCs love to see startups with rising NPS scores—it means you’re building something people actually want and love.

How to Increase NPS

1. Listen and Act on Feedback: Send the NPS survey with a follow-up: “Why did you give that score?” Use the feedback to improve pain points fast.
2. Turn Detractors into Advocates: Reach out personally to unhappy customers. Even a simple apology and fix can flip the script.
3. Celebrate Promoters: Ask happy customers to leave reviews, join referral programs, or contribute to case studies.
4. Improve Product Stability: Most detractors cite bugs, crashes, or slowness. Fixing technical issues often leads to an NPS jump.
5. Use Timing Strategically: Don’t ask for an NPS score too early. Wait until users have experienced real value—then ask.

30. Pipeline Coverage Ratio

What It Is

Pipeline coverage ratio is the total value of sales opportunities in your pipeline divided by your quota (sales target) for a given period. For example, if your quota is $500K and you have $1.5M in pipeline, your ratio is 3:1.

Why It Matters

This metric helps VCs assess your sales team’s likelihood of hitting their numbers. A pipeline coverage ratio of 3x is generally considered healthy. Anything below 2x is risky and could signal weak lead gen or low close rates.

It also shows how repeatable and forecastable your sales engine is—two things investors love.

How to Strengthen Your Pipeline Coverage

1. Build Top-of-Funnel Muscle: Focus on demand generation—content, outreach, partnerships, and events that bring in qualified leads.
2. Improve Qualification Criteria: Better leads make better pipelines. Train your reps to use frameworks like BANT or MEDDIC.
3. Shorten Your Sales Cycle: Faster closes mean more cycles per quarter, which improves the ratio naturally.
4. Use a CRM Religiously: Track every opportunity, stage, value, and likelihood to close. Visibility drives accountability.
5. Layer in Marketing Support: Sales and marketing should work together to nurture pipeline accounts with case studies, webinars, and targeted messaging.

Conclusion

These 30 metrics tell your story—where you’ve been, where you’re going, and how efficiently you’re moving. VCs don’t expect perfection, but they do expect clarity, progress, and the ability to explain your numbers confidently.