Useful Metrics for your Startup

We have put together a list of Metrics that could be useful for your Startup. Each metric could be relevant according to your development stage. The relevance is up to people or investors you speak with. But tracking progress it is a great sign of responsibility and predictability.

We use some of these metrics in progress tracking & evaluation for the startups in our programs: Startup Garage, Startup Spinner Makeathon, Link Point and Square 1 Bootcamp.  

Business and Financial Metrics
ARR – (Annual Recurring Revenue)  The amount of revenue you receive that recurs yearly.

EX: If a customer subscribes to service with a monthly renewal agreement for $1,000 per month, then Annual Recurring Revenue would be;

ARR = $1,000 * 12 = $12,000

ARR per customer: 

  • Upselling
  • Cross-selling

Upselling is the practice of encouraging customers to purchase a comparable higher-end product than the one in question, while cross-selling invites customers to buy related or complementary items. Though often used interchangeably, both offer distinct benefits and can be effective in tandem.

MRR (Monthly Recurring Revenue) The amount of revenue you make that recurs monthly.

The better way of doing it is to simply sum the monthly fee paid by every single paying customer of your installed base. So let’s say you have Customer A paying $200/mo and Customer B paying $100/mo. Your MRR would be $300. See that each customer may be paying a different amount since you can have different plans or event different products in your portfolio.

MRR = SUM(Paying customers monthly fee)

LTV (Lifetime Value) The LTV is the Net Present Value of your profits from year 0 through year 5. 

Calculate the Present Value at Above Cost of Capital, which discounts the profit to take into account that your investors will need to recoup with interest their investment in your business. The Present Value for year 0 is equal to that year’s profits. To calculate the present value for each year’s profits beyond year 0, use the following formula: Present Value = Profit × (1 − Cost of Capital Rate)t where t = number of years after year 0.

CAC (Customer Acquisition Cost) Customer Acquisition Cost (CAC) refers to a company’s costs in order to convince their consumer to buy their product or service.

To calculate CAC you must quantify all the sales and marketing costs for a given period of time and divide it by the number of customers you acquired in that same period.

In order to make it clear, let’s assume that you have calculated your CAC and it is 100 Euros/client and that this is a one-time revenue stream (i.e. your customer buys only one time from you). If the net profit margin of your sale is under 100 Euros this simply means that you pay more to acquire a customer than you gain from this customer.

CAC per channels


Product & engagement metrics

Active users Active users are users that you can identify (by an id, email or username) who interact with your business during a specified period.

For most companies, an active user is one that created an account and is required to log in for any interaction.


  • First-time users
  • One time users (accidental)
Gross margin Gross Margin is the difference between Revenue and Cost Of Goods Sold (COGS). Typically, it is calculated as the selling price of an item, minus the cost of material and labour used to produce the item.

Formula: Sum(Revenue) – Sum(COGS)

Gross Margin can be expressed as a value, such as dollars, or expressed as a percentage, by dividing Gross Margin by Revenue.

Gross Margin is the profit made by a company after the costs incurred in making a product are subtracted from the sales revenue.

Burn rate The burn rate is typically used to describe the rate at which a new company is spending its venture capital to finance overhead before generating positive cash flow from operations; it is a measure of negative cash flow. Burn rate is usually quoted in terms of cash spent per month.

The burn rate is used by startup companies and investors to track the amount of monthly cash that a company spends before it starts generating its own income. A company’s burn rate is also used as a measuring stick for its runway, the amount of time the company has before it runs out of money. So, if a company has $1 million in the bank, and it spends $100,000 a month, its burn rate would be $100,000 and its runway would be 10 months, derived as: ($1,000,000) / ($100,000) = 10.


  • Net Burn: is the total amount of money a company loses each month.
  • Gross burn: the total amount of operating costs it incurs in expenses each month
MoM (Month on month growth) Represents changes in levels expressed with respect to the previous month. MoM measures tend to be more volatile as they are more affected by one-time events (e.g. stock market crash, natural disasters, months with many working days, months with many people on vacation, etc.).

we compare the average of Month X with Month Y to calculate the MoM change  (e.g., an average of June with July and report in August)

Month X – Month Y numbers

_______________________ x 100 = Percentage Growth

Month X

DAU (Daily Active Users) The number of users that return to your startup’s site or app on a daily basis.

The definition of a user: Most DAU calculations consider a user to be any unique visitor who’s downloaded their app or accessed their site and takes an action.

MAU (Monthly Active Users) The number of users that return to your startup’s site or app on a monthly basis
Activation Rate Number of users taking a specific action to get value out of a product.

So for example, If took out an ad in a magazine with a circulation of 1M people and had 100,000 scans of your code your activation rate would be 10%.

Churn rate Churn is the enemy of any subscription company. Churn, also called Customer Churn or Attrition counts the number of customers who cancel or don’t renew their subscription. This metric is often expressed as a percentage that describes the rate at which customers are churning.

Formula: Count(Churned Customers This Period) / (Total # of Customers at the Beginning of the Period)

In order for a company to expand its clients base, its growth rate (number of new customers) must exceed its churn rate (number of lost customers).


Traction metrics

TAM (Total Available Market) In order to define the TAM, you have to calculate the (theoretical) total turnover of your business in case all customers buy only from you as if there are no competitors. The identification of TAM serves as a quick metric for the underlining potential of a given opportunity—and is a key figure that is important for investors to understand the prospective value of your company.

Formula: count the number of potential customers you have (e.g. No of oncologists, No of girls going to high school, No of orange juice producers) and, in turn, the annual revenue per customer per year. If you multiply the two numbers, you will get your TAM.

Market share A company’s market share is its sales measured as a percentage of an industry’s total revenues.

You can determine a company’s market share by dividing its total sales or revenues by the industry’s total sales over a fiscal period.

Industry growth Are you in a “hot segment” that has the potential for tremendous growth? Include this information early on in your pitch. For example, say you are developing an app for the food and beverage industry. Maybe the app uses an algorithm to make craft beer recommendations for food pairings based on user preferences and data.

While the entire food and beverage industry might only be growing at 7 per cent per year, the craft beer segment may be growing at 14 per cent per year. Whenever you can demonstrate that your niche is growing faster than the market it operates in, do so. You can calculate your industry growth rate by dividing the change in market size by the original market size, then multiply the sum by 100.


Metrics for proven traction:
  • Profitability 
  • Revenues
  • Number of active users
  • Number of registered users
  • Amount of engagement
  • Partnerships / clients
  • Traffic generated