Startup Metrics & KPIs | Top 10 Metrics Used by VCs

No video

Startup Metrics & KPIs | Top 10 Metrics Used by VCs

Рет қаралды 24,278

Күн бұрын

We review 10 of the most important startup metrics used by venture capitalists and founders in Silicon Valley to track the performance of early-stage tech businesses.
✅ Download the Excel template: bit.ly/startupm...
🚀 If you want to master the finance skills & frameworks to successfully scale technology startups, secure your spot in my "Finance for Startups" program, today: www.ericandrew...
Communities:
💼 Linkedin: / eric-andrews-1624b656
☑️ Twitter/X: / eric__andrews
🌟 Instagram: / ericandrews_startups
🔥 Discord: bit.ly/discord...
💻 Newsletter: bit.ly/joineri...
🎥 Clips: / @ericandrewsclips7818
Related Startup Videos:
🚩 Startup Unit Economics Journey - From Idea to Exit: • Unit Economics Benchma...
🚩 How to Calculate Customer Churn Rate: • How to Calculate Churn...
🚩 Seed Funding Guide | Most Important Metrics: • Seed Fundraising Guide...
▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬
While there are unlimited metrics that startups can track, many of the key dynamics of their businesses can be measured with a handful of KPIs - that's what we focus on in this video.
We review ten of the most important metrics that tech startups should be measuring as they scale.
1. GMV (marketplaces)
2. Bookings, Revenue, Recurring Rev
3. Growth (YoY, MoM)
4. Gross Profit
5. LTV vs. CAC Ratio
6. Customer Retention / Churn Metrics
7. Recurring vs. Total Revenue
8. Active Customers / Users
9. Paid vs. Blended CAC
10. Burn rate & runway
These 10 metrics will tell us (founders, employees, venture capitalists) about a business's overall scale, the profitability of its products and customers, growth and trajectory, marketing efficiency, and fundraising needs.
I could have made 10 different videos on each subject but I condensed them into one super-video!
SECTIONS:
0:26 gross merchandise value (GMV) - particularly important for marketplaces
1:56 bookings vs. revenue, and deferred revenue (unearned revenue)
3:35 recurring vs. total revenue, MRR & ARR
5:50 growth, year-over-year (YoY), month-over-month (MoM), compounded monthly growth rate (CMGR)
9:01 gross profit (aka gross margin), how to calculate
10:49 LTV: CAC ratio - understanding customer lifetime value vs. ad spend
14:25 customer retention/churn metrics - customer retention by cohort tables
21:08 active customers/users
22:16 customer acquisition cost - way to break out paid vs. blended CAC
24:49 burn rate & runway
By the end of this video, you will understand how to evaluate the metrics of early-stage startups and which KPIs venture capitalists will be most focused on.
If you have questions - please leave a comment below and I'll try to help. Cheers!
► Subscribe for more finance videos: bit.ly/EricAnd...
#startupmetrics #KPIs #startups

Пікірлер: 85

@shakirhasan3957 3 жыл бұрын

So amazingly well explained. I knew the basics of all of these metrics prior to watching this but by watching it those basics seem to have so much more clarity now. Amazing amazing way of simplifying and explaining everything Eric. God bless!

@eric_andrews 3 жыл бұрын

Glad to hear it Shakir, good luck 💪💪💪

@keyspanmusic 3 жыл бұрын

Thanks Eric for keeping us learning and Excelling! Great stuff as always 🙌

@eric_andrews 3 жыл бұрын

Thanks for checking it out Keyspan! Love your DJ sets on your channel as well, I listen to them while I'm financial modeling sometimes 😎😎

@oussamaoussama6364 2 жыл бұрын

Your videos are amazing, keep the good stuff.

@eric_andrews 2 жыл бұрын

Cheers i really appreciate the comment 🙏

@gilpali 2 жыл бұрын

Thank you brother

@eric_andrews 2 жыл бұрын

you are very welcome Gil!

@saarrun 3 жыл бұрын

Every metric clearly explained. To the point. Awesome video!

@eric_andrews 3 жыл бұрын

My pleasure Arun, glad you thought so! Cheers

@FlutterPythoncombo 2 жыл бұрын

I learnt a lot here . Love to buy coffee 4 u bro

@samefishingaustralia 4 ай бұрын

another very well explained video

@eric_andrews 4 ай бұрын

Cheers! You're on a roll

@thetanuagrawal 2 жыл бұрын

Thanks for this, very well explained.

@abbywilliams8697 3 жыл бұрын

Thanks for the amazing content, can you make a video on creating marketing dashboards? That would be really useful!

@eric_andrews 3 жыл бұрын

Actually yes. I'll put that on my list, I do that for lots of startups so I can for sure share that process! Thanks for the idea!

@jonathanedward5062 2 жыл бұрын

Prepping for a VC interview. This is super helpful. Thank you!

@eric_andrews 2 жыл бұрын

You're going to crush it! Dropping another VC related video tomorrow fyi hope it helps

@louiesumalinog7542 9 ай бұрын

How about Operations KPI or Metrics for E-commerce? Do you have suggestions for monitoring specifically what VC might look into?

@eric_andrews 9 ай бұрын

Yep, here is another video I made on the top KPIs for ecommerce kzfaq.info/get/bejne/l7CqhbCgq7rImYU.htmlsi=HNiEBt1qdXeCLjtH

@kingsfordgokah6240 2 жыл бұрын

Great Stuff Eric

@ccaazzoorr Жыл бұрын

Do venture analysts to to analyse past results of a startup or for the business plans of next years ?

@AIDACM971 3 жыл бұрын

Another Excellent Presentation

@eric_andrews 3 жыл бұрын

My pleasure Peter! Thanks for checking it out and glad it was valuable for you.

@jninlove 3 жыл бұрын

I really appreciate your informative video.

@eric_andrews 3 жыл бұрын

Glad it was helpful Grace, cheers! More to come

@savitaicesoonthornsaratoon553 2 жыл бұрын

This video is really useful . Thanks 😊

@eric_andrews 2 жыл бұрын

Awesome, happy to hear it!

@rome229 Жыл бұрын

Wish we could easily track paid CAC on our mobile app. With so many media channels we're using it gets difficult to track.

@kaym7704 3 жыл бұрын

Great stuff. Thanks for sharing.

@eric_andrews 3 жыл бұрын

Hey Kay M - appreciate that feedback, hope it was valuable! Cheers

@elenatertyshnyk6571 3 жыл бұрын

Eric, thank you for useful metrics. Could you please precise in calculation of CAC, why we number of new customer divided by advertising spend, and not vice versa?

@eric_andrews 3 жыл бұрын

Hi Elena, happy to help. I made a video 100% focused on the CAC calculation here, this will answer all your questions for sure! kzfaq.info/get/bejne/br1zm9CC2rrJfmQ.html Quick explanation - we are trying to figure out average marketing spend per NEW customer. So if we spend $500 and we got 10 new customers, then it would be $500 / 10 = $50. But I suggest you check out my other video get get a deeper understanding. Cheers.

@eric_andrews Жыл бұрын

Questions? Let me know in the comments happy to discuss. 🚀 Also, if you want to learn which finance frameworks the top 1% of founders use to scale their startups to massive outcomes, check out my free webinar ⇒ www.ericandrewsstartups.com/financeforstartups

@sonerguney3225 Жыл бұрын

Very good

@eric_andrews Жыл бұрын

You're very welcome!

@eric_andrews 3 жыл бұрын

Any metrics I didn't cover which you think are important? Please share them below 👇👇 !!

@catalyst_cadatalyst6369 2 жыл бұрын

Contribution margin

@eric_andrews 2 жыл бұрын

@@catalyst_cadatalyst6369 that's a good one too! If i made the video again I would include....cheers 😎

@1966rama 2 жыл бұрын

For LTV , what duration of time typically is considered? IS it five years or three years or beyond that ?

@eric_andrews 2 жыл бұрын

@@1966rama You'd want to include the full lifetime if you have historical data. But if you're starting out (meaning you are making an estimate) you want to be relatively conservative. SaaS businesses can potentially have multi-year customer lifetimes but ecommerce businesses often don't. Anyway, the payback period (to breakeven) on the LTV is probably the most important part. Many SaaS businesses are happy with a 1-2 year payback period (if they are on annual contracts) as then they are profitable on that year 2+ period, but many ecommerce businesses need to breakeven on the first order because customers don't return very much. So the payback profile is the most important part, and it totally depends on the product / sector.

@motivational_mojo Жыл бұрын

do you know how to calculate: ... if a client wanted to scale their MRR from $50k a month to $75K per month and their currently paying $1,000 per booked call, how many more appointments do they need to book per month to reach that goal assuming the spend increased to $1,200 per booked call.

@karenkhoo7092 2 жыл бұрын

thanks so much. :)

@LennyYT Ай бұрын

Awesome 🎉 you'd us this knowledge the same today or has things changed?

@eric_andrews Ай бұрын

Yep these are the classic metrics, I'd still use them. Only thing is that since all the privacy tracking has been rolled out the paid vs. blended CAC is a bit harder to differentiate. But CAC is still key to understand.

@ilariaapriledicimia9696 3 жыл бұрын

Super thank you!

@eric_andrews 3 жыл бұрын

Glad it helped Ilaria!

@omaryassersharkawy5902 2 жыл бұрын

Hi Eric, When calculating Average revenue per user for example do you use the total operating revenue (Includes GMV) or do you use the normal revenue (commissions)?

@kacperjurasz5142 2 жыл бұрын

Great video! Shouldn't you divide advertising spend / total customers instead of total customers / advertising spend at 22:16 ? Thanks!

@eric_andrews 2 жыл бұрын

Yes, I hadn't noticed that typo, but you get the idea. Thanks for letting me know!

@Matt.Collins 3 жыл бұрын

Eric, excited to watch this, did you mention a place to download this ?

@eric_andrews 3 жыл бұрын

Yep! There's a link to download in the "resources & links" sections of the description. Thanks for asking Matt

@kel78v2 2 ай бұрын

What are your thoughts on CAC specific to b2b e-commerce? How would you calculate it?

@eric_andrews 2 ай бұрын

B2B meaning retail/wholesale?

@kel78v2 2 ай бұрын

Yes, wholesale. Can we also say coupons are part of advertising costs?

@eric_andrews 2 ай бұрын

@kel78v2 Would you consider anything in there to be a CAC? Maybe the comp/commissions of sales team? Anything else? I would more be focusing on contribution margins per unit and sell through rate.

@saikatbasu6480 Жыл бұрын

Is CMGR a metric that is only applicable to business with a recurring revenue model? or can this be beneficial to business with non-recurring rev as well?

@eric_andrews Жыл бұрын

Can definitely be applied to all businesses. Just gives you a better idea of growth over a longer period, might even be more useful for non-subscription businesses as their revenue tends to be lumpier

@LennyYT Ай бұрын

How do you track and separate organic from paid results successfully?😊

@eric_andrews Ай бұрын

It is much harder than it used to be, nobody has a perfect answer. As one of my marketer friends says "if I had a perfect attribution model I'd be a billionaire", haha. Depends on the channel. Good test is to pause paid campaigns and see what happens. Also a lot of attribution software like Elevar (for FB) that can help. Need to compare all your analytics and try to get as close to attribution as possible.

@quentinacbl 2 жыл бұрын

Hi ! Great job very detailed and well explained ! I just have one question, these are usually for SaaS types of startups right ? Regarding ARR/MRR, what should be the recurring revenues for a startups that sells manufactured goods ? Therefore having volatile sales (in my case I'm looking at one that is at very early stage, just forecasts are available). Many thanks in advance, keep up the good work !!

@eric_andrews 2 жыл бұрын

Hey! So, recurring revenue is obviously a big part of subscription businesses, but it is usually a big part of most businesses. For instance, Amazon's retail revenue is probably almost 100% recurring purchases, etc. But yes there are specific businesses that have mostly revenue from first time buyers. In that case I would just call it annual revenue, and of course those businesses get lower valuations because their customers are not very sticky, but they can still make a lot of $$. Cheers!

@talebbagazi1435 3 жыл бұрын

May you do an example to cover these matrices, sort of a module for an early stage business? i have watched Saas, market place module but to link those matrices would be something great

@eric_andrews 3 жыл бұрын

Thank you for the idea Taleb, I will put it on my list and try to think about a good video for it! Also glad you found my saas and marketplace financial models helpful, cheers!

@talebbagazi1435 3 жыл бұрын

@@eric_andrews i try to learns as much as I can from your videos because it’s very very knowledgeable as I did apply it for pervious work😁

@eric_andrews 3 жыл бұрын

@@talebbagazi1435 I'm really glad to hear that! :)

@darrenwalgate7411 3 жыл бұрын

Thankyou

@eric_andrews 3 жыл бұрын

My pleasure Darren!

@dmill1989 3 жыл бұрын

Muy Bueno!

@eric_andrews 3 жыл бұрын

Gracias Donny!!

@rs.shreyaarora9884 Жыл бұрын

hi, sir where can we find out these matrices? on the official website of a unicorn or startup, in financial statements, or in any database?

@eric_andrews Жыл бұрын

Generally, someone needs to take the database data and create these reports based on the initial customer purchase date and subsequent buying behavior (often a data scientist). If you worked at a startup, they should be creating these reports internally to track retention, but it is very unlikely that any company would publically report these numbers on their website (maybe during an IPO). These are more of an operational report that the marketing team would create.

@rs.shreyaarora9884 Жыл бұрын

@@eric_andrews thank you sir, one more question. where can i find the data regarding the valuation methods used in valuation of startup unicorns.

@lakjax 3 жыл бұрын

thanks Eric this was really helpful. Although 1 doubt do we take only advertising cost in CAC coz there a few videos which gives the same formula for CPA and as per my knowledge they are both different right? Some of them include marketing cost + sales exepense + salaries basically everything in CAC... could you help me out with that

@eric_andrews 3 жыл бұрын

Hi Ashkay, great question, there is no rule for 100% of situations. This is how we calculate it for B2B ecommerce businesses. What you include in CPA depends on which specific expenses touch your customers in the sales process. With B2C companies, it is just advertising. We never include salaries of marketing people (for instance a social media manager would not be included). Sales people however, would be included, but B2C companies usually don't have sales teams. However with B2B companies, there is usually an actual sales team that spends all day contacting customers and selling to them directly - we would include them and their bonuses in CAC, as well as advertising spend. I'm actually releasing a video on CAC for B2B companies hopefully tomorrow, so that should be helpful for you. Cheers

@parshavjain3497 3 жыл бұрын

Video at 8.24, while calculating CMGR - month shall be 10 or 9?

@PriyamvadaGoel 2 жыл бұрын

I hope you don't mind me answering this. It will be 9. Here's why. Let's assume revenues in the months from January to October to be: R1, R2, R3, R4, R5, R6, R7, R8, R9 and R10. Say the CMGR is r%. Then, R2 = R1 (1+r%) R3 = R2 (1+r%) R4 = R3 (1+r%) R5 = R4 (1+r%) R6 = R5 (1+r%) R7 = R6 (1+r%) R8 = R7 (1+r%) R9 = R8 (1+r%) R10 = R9 (1+r%) If you multiply all the 9 equations above, you will be left with, > R10 = R1 (1+r%)^9 > (R10/R1) = (1+r%)^9 > (R10/R1)^(1/9) = 1 + r% > r% = [(R10/R1)^(1/9)] - 1 And so by generalisation, CMGR (or r%) = [{Revenue in the nth month/Revenue in the 1st month}^{1/(n-1)}] - 1 Hope this helps.