Startup Metrics to Track for Growth and Investors

Heading into 2025, it’s more crucial than ever for startups to track the metrics that demonstrate their potential. Investors are scrutinizing new ventures with heightened caution, fueled by global uncertainties like the Russian invasion of Ukraine, persistently high inflation, and mounting fears of a coming global economic downturn. Moreover, the Federal Reserve, European Central Bank, and the Bank of England have embarked on a cycle of monetary policy tightening, further driving the widespread startup investment pullback. Late-stage startup funding declined dramatically in 2023, with Series D rounds falling 58% and Series E+ rounds dropping 72% year-over-year.

While these factors have combined to create a tougher competitive environment for startup companies, business owners still have ways to extend their cash runway for fundraising. Investors still want to invest; they’re simply more cautious about allocating capital because of market volatility.

There are several valuation metrics that investors will consider over the next 12 months. By focusing on these startup valuation metrics, organizations can improve their fundraising success.

Why is It Important to Track Startup Metrics?

Startup metrics provide essential insights into a company’s health and future potential. They help investors evaluate a business’s performance, sustainability, and growth prospects. By staying on top of these metrics, founders can make data-driven decisions and demonstrate a solid understanding of their venture’s trajectory.

What Are the Best Metrics for Valuing a Company?

Business valuations have always been a complex topic. Many market observers have reacted in disbelief at some of the multi-billion-dollar valuations of some tech companies in recent years.

In 2015 there were 80 companies valued at over $1 billion. This figure ballooned to some 900 companies valued at over $1 billion by January 2022. Much of this apparent valuation is tied directly to a company’s growth prospects. However, even the most famous of valuations examples indicate that putting an accurate figure on a company is much easier said than done. In 2019, SoftBank valued WeWork at $47 billion. Just two years later, its value plummeted to $9 billion.

There are so many calculations and seemingly endless types of B2B SaaS metrics for investors to consider when reviewing a company. Therefore, it’s very easy to get overwhelmed. In such situations, keeping it simple with time-tested metrics is generally a good rule of thumb.

However, in this investor-cautious market, startups must respond by focusing on what investors want to see, which can be facilitated through investor reporting software.

Choosing the Right Metrics for Your Startup

Every startup has unique goals, funding timelines, and operating models. By focusing on the metrics that match your stage of growth and strategic objectives, you’ll present compelling data to investors and optimize your resource allocation.

On another side, investors typically use a selection of startup valuation metrics to determine the financial performance and feasibility of a business. This multiple-analysis method provides investors with the key insights that they are looking for when deciding to invest.

1. Growth analysis

Growth analytics can include a variety of key metrics. These typically include total revenue, year-over-year revenue growth, and quarterly growth, and for older startups, can include the compound annual growth rate for a period of years.

Tip: Early-stage SaaS companies often target more than 100% year-over-year growth, while more mature startups aim for at least 50%, as highlighted in these SaaS forecasting tips.

2. Gross margin

The total revenue after deducting the cost of goods sold (COGS), expressed as a percentage.

For instance, $1,000,000 minus COGS of $300,000 = $700,000, expressed as a gross margin of 70%.

This metric helps active investors understand how the business performs with existing revenue sources. It’s particularly important to establish a strong NDR for SaaS startups, as they’re often subscription-based. While average SaaS companies take 20-30 months to recover customer acquisition costs, top-performing companies achieve payback in less than 14 months.

Tip: Many SaaS businesses maintain a gross margin between 70% and 80%.

3. Net dollar retention (NDR)

This metric helps active investors understand how the business performs with existing revenue sources. It is particularly important to establish a strong NDR for SaaS startups, as they are often subscription-based.

It measures annual recurring revenue to generate insight into how much a business has shrunk or grown. It is important as it can highlight problematic customer churn rates or show how well a company retains its customers. An NDR of over 100% is much more attractive to investors.

Tip: Leading SaaS companies often target NDR above 120%.

4. Customer acquisition cost (CAC) payback

The period of time that a company needs to recoup the investment required to acquire a new customer. The lower the CAC payback figure, the better.

A strong CAC payback typically falls between a four to six-month timeframe but should be no more than 12 months.

Tip: Seed-stage startups may tolerate payback up to 12 months, while Series B and beyond often aim for under six months.

5. Burn multiple

This company valuation metric indicates how adept, or not, a startup is at using its cash to generate growth. The lower the burn multiple, the better. It calculates the amount a company spends for each incremental dollar of annual recurring revenue (ARR).

To calculate a burn multiple, a startup must first know two metrics.

Net burn: Cash revenue minus operating expenses
Net new ARR: New ARR plus expansion ARR before subtracting churned ARR

The burn multiple is then worked out by dividing net burn by net new ARR.

Tip: A burn multiple below 1x is outstanding, while 1–2x is typical for many early-stage startups.

6. Lifetime value (LTV)

An estimate of the total revenue that a customer will generate for a business.

LTV can be calculated by multiplying the average value of sales by the number of transactions. The number of transactions is determined by factoring in the average retention rate of each customer.

Tip: Many B2B SaaS ventures aim for an LTV that’s at least three to four times their CAC, as outlined in this SaaS metrics cheat sheet.

7. Revenue per employee

A simple calculation achieved by dividing the total revenue by the number of employees. It can be particularly helpful to ascertain any difference in revenue relative to the employee number when comparing year-over-year figures.

These seven startup valuation metrics together form a robust, detailed overview of your company’s financials. They are going to be essential for demonstrating your organization’s appeal to investors.

Tip: While it varies, many growth-stage startups see $100,000 to $300,000 in revenue per employee, which aligns with guidelines in our KPI cheat sheet.

Top Tips for Attracting Investors in Difficult Market Conditions

Many early-stage startups make the mistake of thinking that potential investors simply don’t want to invest when market volatility and uncertainty persist. This is not true. Most investors do still want to invest. They are simply more cautious about where they put their money. They tend to take extra precautions to assess your company before deciding.

Here are some tips to put your company in a strong position to continue to receive funding during difficult market conditions:

1. Have a clear understanding of your financial position

Investors want to know key financial metrics. By having these ready to go, you will be able to provide prompt, informed communication and data to would-be investors. To do so, you must have a full and clear understanding of your company’s financial statements.

2. Establish an efficient financial reporting process

Using the right financial management software can ensure that your company is able to keep track of its financials and update them in a timely manner. This can ensure that the data gathering, fundamental analysis, and interpretation steps are fast and comprehensive and that the investor reporting process is highly detailed and precise.

3. Focus on your leadership team

Investors will focus on leadership teams whatever the state of the market is, but this will especially be the case during less predictable conditions. More than ever, they will want to invest in people they believe in. Typically, investors will want to see strong competence, market knowledge, and synergy between business owners that lead your company – the founders, executives, and department heads.

Drive Your Fundraising Campaign Success with the Right Approach and Support

By adapting to changing active investor preferences, you put your company in the best position for fundraising success. The alternative of having your own defined way of showcasing your company and expecting angel investors to adapt to you may place you at a disadvantage.

Now is the time to get your company in as best shape as possible and have a clear view of its financial position. To do so, look for a financial planning and analysis software that harnesses leading technological capabilities in automation, data management, and collaboration to accelerate your performance.

Abacum can empower your company to exceed investor expectations with unrivaled performance tracking, board and investor reporting, and detailed financial forecasting to drive your business growth and enable precise measurement in real-time.

If you are looking for a solution to help streamline your data into a centralized platform, Abacum is your cutting-edge, cloud-based platform.