The Metrics Every Entrepreneur Should Know by Heart

Most startup investors look for entrepreneurs who know their business inside and out. Historical financials are rarThe Metrics Every Entrepreneur Should Know by Heartely a good predictor of future startup success, but entrepreneurs’ understanding of their financials and key metrics can be. In helping our MergeLane teams prepare for Demo Day last month, we put together a list of financial metrics that every entrepreneur should know by heart (or at least have on hand) when meeting with investors.

Here they are:

Revenue

  • Monthly for past six months
  • Yearly for past three years
  • Year-to-date
  • Month-to-date
  • Average revenue by channel for previous quarter and year

Revenue growth (as a percentage)

  • Month-over-month for past six months
  • Year-over-year for the past three years
  • Year-over-year growth per quarter
  • Revenue growth rate decline (SaaS)

Gross margin

  • Current gross margin
  • Year-over-year percentage decrease or increase for last three years
  • Projected year-over-year decrease or increase for next three years

Customer acquisition metrics (if applicable)

  • Monthly recurring revenue (MRR)
  • Churn rate
  • Site traffic – year-to-date, last year, monthly for past three months
  • Customer acquisition cost (CAC)
  • Customer lifetime value (LTV)

Cash

Funding history

  • Amount raised to date
  • Timing and terms of previous financing (debt vs. equity, valuation, etc.)

Funding plan – current

  • Details of current fundraise (amount raising, key terms, valuation)
  • Use of proceeds
  • Amount closed (in the bank) and soft-circled (amount verbally agreed to)
  • Length of runway with current raise

Future funding

  • Projected amount to be raised over the life of the company
  • Amount and timing of next raise

Other metrics:

  • Time to break-even
  • Current accounts receivable / accounts payable

I hope this is helpful and please share any metrics you think I’m missing.

4 Comments

  1. Steven Hess
    Permalink

    In many of the cases you mention it is helpful both for the investor and the management team to consider those metrics versus a competitive set. Who is the enemy and how are you performing against them? Sometimes a good idea not to think in isolation.

    Like

    Reply
    • Elizabeth Kraus
      Permalink

      Great point Steven. It also shows diligence and sophistication on the entrepreneur’s part if they understand how they compare. Thanks for this.

      Like

      Reply

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