Quantitative measures used to evaluate fund and company performance — IRR, MOIC, TVPI, DPI, ARR, and other KPIs.
108 terms
Annual Recurring Revenue — the annualized value of a company's subscription or contract revenue. The primary revenue metric for SaaS and subscription businesses, used to benchmark growth, valuation, and fundraising.
A valuation metric expressing a company's enterprise value as a multiple of its Annual Recurring Revenue — the primary valuation benchmark for high-growth SaaS businesses.
Excess returns generated above a benchmark, attributed to skill rather than market conditions.
The average annual revenue generated per customer contract, commonly used in SaaS businesses.
A performance standard used to evaluate a fund's returns — typically the median or top-quartile IRR among peer funds of the same vintage year.
The carrying value of a portfolio investment on a fund's books — usually the last round valuation or a write-down if performance has deteriorated.
Net burn divided by net new ARR — a measure of how efficiently a company is converting cash spending into revenue growth. The lower the burn multiple, the more capital-efficient the growth.
Burn rate is how much cash a company consumes per month: gross burn is total outflows, net burn subtracts customer collections.
Customer Acquisition Cost — the total cost to acquire one new customer, including sales and marketing expenses. A core unit economics metric that determines whether a business model is economically viable at scale.
The number of months required to recover the cost of acquiring a customer from the gross profit that customer generates — a core measure of go-to-market efficiency.
A periodic report provided to each LP showing their individual fund position including contributions, distributions, share of gains/losses, management fees, and current NAV.
How much growth a company buys with each dollar it burns, measured as a ratio rather than described as a virtue.
The rate at which customers cancel or fail to renew their subscriptions over a given period, expressed as a percentage of total customers or revenue.
The percentage of customers or revenue lost over a given period, a critical indicator of product-market fit.
Tracking the behavior of a specific group of customers (cohort) acquired in the same period over time — the gold standard for measuring retention.
A valuation method that estimates a company's value based on the trading multiples of similar public or recently acquired companies.
The total cost of acquiring a new customer, including all sales and marketing expenses.
The risk created when a large percentage of revenue comes from a small number of customers.
The ratio between lifetime value (LTV) and customer acquisition cost (CAC), commonly used to evaluate SaaS business health.
The degree to which customers continue using a product due to habit, switching costs, or embedded workflows.
DPI is distributions to paid-in capital: cash actually returned to investors divided by capital actually called. It counts realized money only.
Distributions to Paid-In — the ratio of cash actually returned to LPs versus capital contributed, measuring realized (not paper) returns.
A company that would reach profitability on its current trajectory before running out of cash — without needing to raise additional capital.
A company that will run out of cash before reaching profitability if it maintains its current trajectory — the opposite of default alive.
The percentage of LPs who fail to meet capital calls, or the percentage of venture debt borrowers who default on their obligations.
Earnings Before Interest, Taxes, Depreciation, and Amortization — a proxy for operating cash flow and profitability, especially relevant for growth equity and PE deals.
A valuation metric expressing a company's value as a multiple of its EBITDA — commonly used in growth equity and private equity but less in early-stage VC.
The longer, more complex sales process typically required to close deals with large organizations.
The total value of a company including equity and net debt — a more complete measure of company value than market cap alone.
A company's total value including equity, debt, and cash — a more comprehensive measure than market capitalization alone.
The ratio of exit value relative to the invested capital.
Additional recurring revenue generated from existing customers through upsells, cross-sells, seat additions, or usage growth — a key driver of net revenue retention above 100%.
The estimated market value of an investment, used by VC funds to mark portfolio companies on their books between financing events.
Cash generated by a business after accounting for capital expenditures — a measure of true financial health and the basis for many valuation models.
Revenue recognized according to Generally Accepted Accounting Principles, which may differ significantly from bookings or cash received.
Gross Revenue Retention — the percentage of recurring revenue retained from existing customers over a period, excluding expansion revenue. Unlike NRR, GRR can never exceed 100%.
The percentage of a fund's portfolio companies that successfully raise the next round of financing, indicating deal quality and portfolio momentum.
The total amount of cash a company spends each month across all operating expenses, before any revenue is subtracted.
Revenue minus cost of goods sold (COGS), expressed as a percentage — a fundamental measure of how much value a business retains from each dollar of revenue after direct costs.
The percentage of recurring revenue retained from existing customers over a period, excluding any expansion revenue from upsells — measures pure churn.
The point where revenue or user growth accelerates significantly.
Extremely rapid startup growth, often defined as 100%+ annual revenue expansion.
IRR is the annualized rate that makes the present value of an investment's cash flows equal zero. It is the timing-sensitive companion to a multiple.
A waterfall that decomposes the change in a fund's internal rate of return between two measurement dates into the drivers that produced it.
A structured system for quantifying and reporting the social or environmental impact of investments alongside financial returns.
A company's inferred value based on the price paid for a portion of its equity, which may differ from its actual enterprise or intrinsic value.
A moment when a company's growth trajectory accelerates significantly due to product-market fit or scaling.
The annualized return rate that makes the net present value of all cash flows equal to zero — the standard VC performance metric.
A reporting tool summarizing the most important performance indicators for a company.
A measurable metric that tracks progress toward a critical business objective.
The percentage of startups in a portfolio that fail or return less than invested capital.
Lifetime Value — the total revenue a business expects to earn from a single customer over the entire duration of their relationship.
MOIC is multiple on invested capital: total value, realized plus unrealized, divided by the capital invested. It ignores time entirely.
Multiple on Invested Capital — the total value returned divided by the total capital invested, expressed as a multiple (e.g., 3x means tripling your money).
Monthly Recurring Revenue — the total predictable subscription revenue a company earns each month. The month-by-month building block of ARR and the most closely tracked revenue metric for early-stage SaaS.
A sales efficiency ratio: the quarter-over-quarter change in recurring revenue, annualized, divided by the prior quarter's sales and marketing spend.
Adjusting the carrying value of portfolio investments to reflect current market prices or estimated fair values.
The percentage of a total market currently captured by a company.
The early signals that indicate product-market fit may be emerging.
The number of paying or engaged customers in a given month.
Net Dollar Retention (also Net Revenue Retention or NRR) — the percentage of recurring revenue retained from existing customers over a period, including expansions and contractions.
Net Revenue Retention — the percentage of recurring revenue retained from existing customers over a period, including expansions and contractions. Same concept as NDR (Net Dollar Retention).
The actual monthly cash loss after subtracting revenue from total operating expenses — the real rate at which a company is depleting its cash reserves.
Net dollar retention is this year's revenue from last year's customers divided by last year's revenue from those same customers, expressed as a percentage.
The percentage of recurring revenue retained from existing customers over a period, including expansion and contraction.
The degree to which a company can increase revenue without proportionally increasing costs, driving margin expansion at scale.
Revenue minus operating expenses expressed as a percentage of revenue.
Revenue or user growth achieved without acquisitions or paid marketing.
The time required for a company to recover its Customer Acquisition Cost (CAC) from the gross margin generated by that customer.
A measure of how efficiently a company recovers sales and marketing spend.
In sales: the total value of potential deals in progress. In VC fundraising: the pool of potential investors a startup is engaging.
The percentage of potential deals that convert into paying customers.
Highly engaged users who derive significant value from a product and often influence others to adopt it.
How strongly customer demand changes when pricing changes.
The likelihood that customers continue using a product due to habit or switching costs.
How quickly a team gets a decision about the product into customers' hands, measured by delivery throughput rather than by activity.
A methodology for comparing VC fund returns against what the same capital would have earned in public markets.
Residual value to paid-in capital: the share of a fund's reported performance that still sits in unsold assets rather than in cash already distributed.
The percentage of customers who continue using a product over time.
A waterfall that decomposes the change in revenue between two periods into named components that sum exactly to the difference.
When a large share of revenue comes from a few customers.
A valuation metric expressing company value as a multiple of revenue — used when EBITDA multiples aren't applicable because the company is pre-profit or early-stage.
The reliability of future revenue projections.
The predictability of future revenue based on contracts or subscription models.
Return on investment measured relative to the risk taken — a 3x return in venture capital represents a different risk-adjusted return than a 3x return in bonds.
A SaaS health metric: a company's revenue growth rate plus profit margin should equal or exceed 40%, balancing growth and profitability.
The Rule of 40 says a healthy software company's growth rate plus its profit margin should add up to at least 40 percent.
Projected annual revenue based on current monthly or quarterly performance.
Runway is how many months a company can keep operating before its cash reaches zero: cash divided by monthly net burn.
The standard set of KPIs used to evaluate software-as-a-service business performance.
A measure of how much revenue a company generates relative to its sales and marketing spend — often tracked as the Magic Number or CAC Payback Period.
TVPI is total value to paid-in capital: distributions plus remaining net asset value, divided by capital contributed. It equals DPI plus RVPI.
Total Value to Paid-In — the sum of distributions plus remaining portfolio value, divided by capital contributed. Includes both realized and unrealized returns.
The estimated value of a business beyond the explicit forecast period, often the largest component of a DCF valuation.
An integrated financial model linking the income statement, balance sheet, and cash flow statement.
Funds whose returns rank in the top 25% of all funds from the same vintage year.
The total revenue opportunity available if a product achieved 100% market share.
Measurable evidence that a startup's product is gaining market adoption — revenue growth, user growth, retention, and engagement are common traction metrics.
The direct revenues and costs associated with a single customer or unit — used to assess whether a business can be profitable at scale.
The paper profit on investments that haven't been sold or exited yet.
The cost required to acquire a new user, commonly used in consumer tech.
A measurement of how frequently and deeply users interact with a product.
The percentage of users who continue using a product over time.
A large customer that contributes a disproportionately large share of revenue.
The difference between a company's current assets and current liabilities.
A reduction in the carrying value of a portfolio investment — typically reflecting poor company performance or a down round financing.
A total write-down of a portfolio investment to zero — when a company has failed and the investment is a complete loss.
Growth driven entirely by organic or viral adoption rather than paid marketing.