Startup Metrics in a Down Market

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In an upmarket, startup metrics focus on growth rates, cost of customer acquisition, and scalability factors.

In a down market, the startup metrics focus on efficiency.

Here's a list of key startup metrics to use in a down market:

Burn multiple.

This measures the startup's efficiency in growth.

It's the net annual burn rate divided by the net new ARR.

Rule of 40.

This is another efficiency metric.

The growth rate and profitability added together should reach 40.

Customer payback period.

This calculates the number of months to pay back the cost of acquiring a customer.

It's calculated by taking the cost of customer acquisition and dividing it by the monthly revenue from that customer.

Revenue per employee.

This measures productivity by showing how much growth can be sustained by the employees.

It's calculated by taking the annual revenue for the company and dividing it by the number of employees.

These metrics shift the focus from raw growth to efficiency.

Consider these metrics for your startup.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

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