The Top 10 VC Metrics

Click the image above to read the complete guide

1️⃣ Monthly Recurring Revenue (MRR) / Annual Recurring Revenue

MRR represents the amount of recurring revenue from customers who have monthly contracts with you

ARR represents the same thing, but for customers committed to annual contracts

2️⃣ Average Contract Value (ACV) / Average Revenue per User (ARPU)

ACV is more common for B2B companies

ARPU is more common for B2C companies

Formula:

ACV = Total revenue / # of contracts

ARPU = Total Revenue / total users

3️⃣ Customer Acquisition Cost (CAC)

CAC is the total $$ amount that it takes to acquire a customer

It’s calculated by taking Sales & marketing expense for a specific period / new users acquired for a specific period

4️⃣ Lifetime Value (LTV)

LTV represents the total amount you can expect from a customer over their lifetime with using your product / service

5️⃣ CAC Payback

CAC Payback helps you understand how long it takes to make back the money you spent to acquire a customer

Formula:

I’ve seen this calculated 2 ways…

CAC / New MRR

Or IMO more accurately..

CAC / Gross Profit

6️⃣ Churn

Churn represents the amount of lost customers, or revenue, from customers who were once active

7️⃣ Net Dollar Retention

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

Formula:

Ending MRR specific customer or cohort / Opening MRR

8️⃣ Cash Burn

Cash Burn represents the total cash that left your bank account in a given period, not including transactions related to financing activities (equity / debt)

Formula:

Cash from Operating Activities + Cash from Investing Activities

9️⃣ Expansion / Contraction

Expansion represents the added MRR from existing customers

Contraction represents the lost MRR from existing customers (who haven’t fully churned)

🔟 Gross Profit / Gross Margin

Gross Profit is what’s left over after you subtract out your Cost of Goods Sold from your Revenue

Gross Margin is your Gross Profit as a % of your revenue

Formula:

Gross Profit = Revenue - COGS

Gross Margin = Gross Profit / Revenue

Those were the Top 10 VC Metrics...