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All Venture Capital (VC) Content
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Activation Rate
Activation RateWhat is Activation Rate? The Activation Rate (%) represents the percentage of users that complete a specific action defined by a SaaS company as a “milestone.” Often referred to as the “us...
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Annual Contract Value (ACV)
Annual Contract Value (ACV)What is Annual Contract Value (ACV)? The Annual Contract Value (ACV) refers to the annualized revenue per customer contract, excluding any one-time fees.
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Average Revenue Per Account (ARPA)
Average Revenue Per Account (ARPA)What is Average Revenue Per Account (ARPA)? Average Revenue Per Account (ARPA) quantifies a SaaS or subscription-based company’s average monthly recurring revenue (MRR) per account and is most o...
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Average Time on Page
Average Time on PageWhat is Average Time on Page? The Average Time on Page measures the approximate time spent on a specific webpage by the visitors of a website. By tracking the amount of time spent on a page, a company...
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Bessemer Efficiency Score
Bessemer Efficiency ScoreWhat is the Bessemer Efficiency Score? The Bessemer Efficiency Score is a measure of capital allocation and spending habits to determine the efficiency at which a SaaS company is growing.
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Bookings vs. Billings
Bookings vs. BillingsWhat are Bookings vs. Billings? Bookings are a SaaS metric that represents the value of a customer contract with a contractual spending commitment, most often structured as an annual or multi-year agr...
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Burn Multiple
Burn MultipleWhat is the Burn Multiple? The Burn Multiple measures the amount a startup is spending in order to generate each incremental dollar of annual recurring revenue (ARR).
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Burn Rate
Burn RateWhat is Burn Rate? The Burn Rate is the rate at which a company spends its cash, most often used to analyze the spending of early-stage start-ups. In the context of cash flow negative start-ups, the b...
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Capitalization Table
Capitalization TableWhat is Cap Table? The Cap Table is tracked by venture capital (VC) firms to provide a summary of the current capitalization (i.e. equity ownership) in a startup or venture-backed business.
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Cash Runway
Cash RunwayWhat is Cash Runway? The Cash Runway measures the implied amount of time that an early-stage startup can continue operating at a loss before depleting its cash on hand.
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Click-Through Rate (CTR)
Click-Through Rate (CTR)What is Click-Through Rate? The Click-Through Rate (CTR) measures the effectiveness of an ad by dividing the number of clicks on the ad (or link) by the total number of impressions.
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Convertible Note
Convertible NoteWhat is a Convertible Note? A Convertible Note is a form of short-term financing wherein the loan converts into equity rather than being repaid in cash. Startups rarely qualify for traditional debt fi...
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Cost Per Lead (CPL)
Cost Per Lead (CPL)What is Cost Per Lead? The Cost Per Lead (CPL) is the dollar amount spent on ad and marketing campaigns to acquire a new lead, i.e. a potential customer. CPL is tracked as part of a company’s le...
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Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV)What is Customer Lifetime Value? Customer Lifetime Value (CLV) estimates the average profit a customer brings in for a company throughout their entire lifespan of doing business together. The customer...
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Daily Active Users (DAU)
Daily Active Users (DAU)What are Daily Active Users (DAU)? The Daily Active Users (DAU) metric measures user engagement by counting the unique users or visitors that interacted with an app or site on a particular date.
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DAU/MAU Ratio
DAU/MAU RatioWhat is the DAU/MAU Ratio? The DAU/MAU Ratio is a user engagement metric that measures the approximate number of days in a month that users perform a specific action. The DAU/MAU ratio represents the...
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First Chicago Method
First Chicago MethodWhat is First Chicago Method? The First Chicago Method is a probability-weighted valuation of a company using different cases and a probability weight assigned to each case.
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Forward Multiple
Forward MultipleWhat is Forward Multiple? A Forward Multiple is a valuation ratio that reflects a company’s value on the basis of an estimated financial metric, i.e. forecasted earnings performance.
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Golden Handcuffs
Golden HandcuffsWhat are Golden Handcuffs? Golden Handcuffs refer to the deferred incentives offered to employees in an effort to encourage them to remain a part of the company over the long run.
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Growth Equity Interview Guide
Growth Equity Interview GuideHow To Prepare For a Growth Equity Interview? For candidates preparing for a Growth Equity Interview, it is important to understand the job’s day-to-day tasks, the fund’s investment criter...
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Hype Factor
Hype FactorWhat is the Hype Factor? The Hype Factor is a ratio that compares the amount of capital raised by a startup to its annual recurring revenue (ARR).
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Lead Velocity Rate (LVR)
Lead Velocity Rate (LVR)What is Lead Velocity Rate? The Lead Velocity Rate (LVR) is a KPI that measures the real-time growth in the number of qualified leads that a SaaS company collects per month. Frequently tracked by earl...
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Liquidation Preference
Liquidation PreferenceWhat is Liquidation Preference? A Liquidation Preference represents the amount the company must pay to the preferred investors at the exit, after secured debt and trade creditors.
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Monthly Active Users (MAU)
Monthly Active Users (MAU)What is Monthly Active Users (MAU)? Monthly Active Users (MAU) is a user engagement metric that tracks the number of unique visitors that engage with a site, platform, or app within a specified month....
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Net Negative Churn
Net Negative ChurnWhat is Net Negative Churn? Net Negative Churn occurs when a SaaS or subscription-based company’s expansion revenue (e.g. from upselling, cross-selling) exceeds the lost revenue from churned customers...
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Pre-Money vs. Post-Money Valuation
Pre-Money vs. Post-Money ValuationPre-Money vs. Post-Money Valuation: When it comes to evaluating early-stage companies, the Pre-Money Valuation refers to how much a company’s equity is worth prior to raising capital in an upcoming ro...
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Renewal Rate
Renewal RateWhat is the Renewal Rate? The Renewal Rate measures the proportion of customers who opt to renew and extend their contracts at the end of a subscription period. SaaS and subscription-oriented companie...
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Repeat Purchase Rate
Repeat Purchase RateWhat is the Repeat Purchase Rate? The Repeat Purchase Rate measures the proportion of a company’s customers that make more than one purchase. By returning to complete another transaction on a later da...
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Return on Ad Spend (ROAS)
Return on Ad Spend (ROAS)What is ROAS? The Return on Ad Spend (ROAS) measures the revenue earned for each dollar spent on marketing and advertising initiatives. Conceptually, ROAS is practically identical to the return on inv...
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Revenue Churn
Revenue ChurnWhat is Revenue Churn? Revenue Churn measures the percentage of recurring revenue that a company lost due to customer cancellations, non-renewals, and account downgrades in a given period.
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Run Rate Revenue
Run Rate RevenueWhat is Run Rate? The Run Rate is the expected performance of a company estimated from extrapolating data from a recent period assuming that current conditions will continue.
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SaaS Quick Ratio
SaaS Quick RatioWhat is SaaS Quick Ratio? The SaaS Quick Ratio ensures a company’s recurring revenue growth is balanced with enough customer retention. The industry-specific SaaS KPI metric is intended to measure the...
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Sales Capacity Planning
Sales Capacity PlanningWhat is Sales Capacity Planning? Sales Capacity Planning is a type of predictive model wherein management attempts to optimize a company’s revenue growth (the “top line”) while making efficient hiring...
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Take Rate
Take RateWhat is Take Rate? The Take Rate refers to the fees collected by a third-party service platform, such as an eCommerce marketplace or payment services provider.
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The Rule of 40
The Rule of 40What is the Rule of 40? The Rule of 40 states that, at scale, the combined value of revenue growth rate and profit margin should exceed 40% for healthy SaaS companies.
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Total Contract Value (TCV)
Total Contract Value (TCV)What is Total Contract Value (TCV)? The Total Contract Value (TCV) represents the full value of a customer’s contract across an agreed-upon term, inclusive of all recurring revenue and one-time fees.
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Total Order Value (TOV)
Total Order Value (TOV)What is Total Order Value (TOV)? Total Order Value (TOV) represents the gross monetary value of all orders placed by customers over a specified period.
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Unicorn Startup
Unicorn StartupWhat is a Unicorn Startup? A Unicorn Startup in the venture capital (VC) industry is a term that refers to a private startup that has obtained a total valuation in excess of $1 billion.
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Venture Capital Due Diligence
Venture Capital Due DiligenceWhat is Due Diligence in Venture Capital? Venture Capital Due Diligence is performed by investors when evaluating potential investments in early-stage startups, which encompass substantial risks. Cons...
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Venture Capital Term Sheet (VC)
Venture Capital Term Sheet (VC)What is a VC Term Sheet? The VC Term Sheet establishes the specific conditions and agreements of venture investments between an early-stage company and venture firm. The term sheet is short, usually l...
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Venture Capital Valuation (VC)
Venture Capital Valuation (VC)What is Venture Capital Valuation? In Venture Capital Valuation, the most common approach is called the Venture Capital Method by Bill Sahlman, which we’ll provide an example calculation in our...
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Venture Debt
Venture DebtWhat is Venture Debt? Venture Debt is a form of flexible, non-dilutive financing offered to startups to extend their implied cash runway and fund near-term working capital needs until their next round...
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Viral Coefficient
Viral CoefficientWhat is Viral Coefficient? The Viral Coefficient (K-Factor) is an estimate of the number of new users that the average customer can refer to using a company’s product or services. While there are vari...