Growth Metrics VCs Want to See (But Startups Often Ignore)
When pitching for funding, founders often focus on topline revenue—but savvy investors dig deeper. The growth metrics VCs want to see go beyond basic numbers, giving insight into unit economics, product-market fit, and longevity. In this article, we’ll explore both traditional and often-overlooked startup growth metrics that can turn a pitch from “nice” to “investable.”
1. Monthly Recurring Revenue (MRR) & Revenue Growth Rate
MRR is the lifeblood of SaaS and recurring revenue businesses. VCs assess not just how much you’re making today—but how fast you’re growing it. Aim to show consistent MoM% growth and explain whether it’s linear or accelerating.
Why it matters:
- MRR signals sustainability; steady growth builds investor confidence.
- Revenue growth underpins valuation—VCs often look for 15–20% MoM for early-stage startups.
2. Gross Margin
VCs often expect gross margins above 60%, especially in software, indicating leverage and profitability potential.
Why it matters:
- High margins mean room for customer acquisition spend.
- Investors see margin trends as signs of operational efficiency and scalability.
3. Customer Acquisition Cost (CAC) & CAC Payback
Calculate CAC by dividing your paid acquisition spend by new customers in a period. Then show CAC payback period—how long it takes to recoup that investment.
Why it matters:
- A healthy ratio (e.g., 3:1 LTV to CAC) highlights cost efficiency.
- Trends in CAC are early indicators of rising marketing costs or inefficient channels.
4. Customer Lifetime Value (LTV)
Estimating LTV demonstrates long-term revenue potential. Compare it to CAC to prove sustainable economics.
Why it matters:
- An LTV:CAC ratio ≥ 3:1 signals capital efficiency vcinvestorlist.com.
- Founders with strong long-term value present lower-risk investment opportunities.
5. Retention & Churn Rates
Churn shows how many customers you’re losing; retention reflects lasting user value. VCs see retention as the “truth serum” of product health.
Why it matters:
- High retention lowers CAC pressure.
- YC-backed startups often showcase a continuous “up‑and‑to‑the‑right” retention curve.
6. DAU/MAU Ratios & Feature Adoption
Product usage metrics—like DAU/MAU and time to first value—indicate user engagement and product-market fit.
Why it matters:
- Strong adoption shows users are finding value and coming back.
- Feature adoption signals where users are gaining value and informs roadmap prioritization.
7. Net Dollar Retention (NDR)
NDR accounts for churn, upsells, and downgrades. An NDR > 100% indicates expansion outweighs losses.
Why it matters:
- It’s a growth multiplier from within your customer base—very appealing to investors.
8. Cash Burn Rate & Runway
VCs want visibility on how fast you’re spending and how long the runway lasts.
Why it matters:
- Indicates financial discipline and risk of dilution via future raises.
- Cash runway of 12–18 months is often considered healthy.
9. K-Factor & Viral Coefficient
Metrics like referral rate or K-factor show organic growth through word-of-mouth.
Why it matters:
- Viral growth models significantly lower payback periods and acquisition costs.
- Demonstrates build-in marketing with minimal spend.
10. TAM & Competitive Positioning
Large Total Addressable Market (TAM) signals big opportunity. Tie that to your market share and competitive trajectory.
Why it matters:
- VCs back outsized outcomes—firm grasp of TAM and share builds confidence.
- Supporting data shows awareness of market limits and growth planning.
Focusing on the growth metrics VCs want to see elevates your pitch from hopeful to credible. By showcasing a balanced blend of revenue traction, unit economics, retention, product engagement, and cash discipline, you prove you’re building for scale—and investment. Prioritize these metrics and include them in every update, pitch deck, and investor meeting.
Learn more about constructing investor-ready decks and metrics at Foundersmax, where we guide founders to build data-driven strategies.
