Metrics & Performance

Quantitative measures used to evaluate fund and company performance — IRR, MOIC, TVPI, DPI, ARR, and other KPIs.

120 terms

ARR

ARR (annual recurring revenue) is MRR x 12: the annualized value of a company's active subscription or contract revenue, excluding one-time fees. 200 customers paying $500 a month is $1.2M ARR.

ARR Multiple

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.

Alpha

Excess returns generated above a benchmark, attributed to skill rather than market conditions.

Annual Contract Value (ACV)

The average annual revenue generated per customer contract, commonly used in SaaS businesses.

Batting Average

The percentage of a VC's investments that generate positive returns, as opposed to partial or total losses.

Benchmark

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.

Book Value

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.

Burn Multiple

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

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.

CAC Payback Period

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.

Capital Account Statement

A periodic report provided to each LP showing their individual fund position including contributions, distributions, share of gains/losses, management fees, and current NAV.

Capital Efficiency

How much growth a company buys with each dollar it burns, measured as a ratio rather than described as a virtue.

Capital Efficiency Ratio

The ratio of revenue generated to total capital raised, measuring how effectively a startup converts investment into growth.

Churn

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.

Churn Rate

The percentage of customers or revenue lost over a given period, a critical indicator of product-market fit.

Cohort Analysis

Tracking the behavior of a specific group of customers (cohort) acquired in the same period over time — the gold standard for measuring retention.

Comparable Company Analysis

A valuation method that estimates a company's value based on the trading multiples of similar public or recently acquired companies.

Customer Acquisition Cost

The total cost of acquiring a new customer, including all sales and marketing expenses.

Customer Concentration Risk

The risk created when a large percentage of revenue comes from a small number of customers.

Customer Lifetime Value Ratio

The ratio between lifetime value (LTV) and customer acquisition cost (CAC), commonly used to evaluate SaaS business health.

Customer Stickiness

The degree to which customers continue using a product due to habit, switching costs, or embedded workflows.

DPI

DPI is distributions to paid-in capital: cash actually returned to investors divided by capital actually called. It counts realized money only.

DPI

Distributions to Paid-In — the ratio of cash actually returned to LPs versus capital contributed, measuring realized (not paper) returns.

Default Alive

A company that would reach profitability on its current trajectory before running out of cash — without needing to raise additional capital.

Default Dead

A company that will run out of cash before reaching profitability if it maintains its current trajectory — the opposite of default alive.

Default Rate

The percentage of LPs who fail to meet capital calls, or the percentage of venture debt borrowers who default on their obligations.

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization — a proxy for operating cash flow and profitability, especially relevant for growth equity and PE deals.

EBITDA Multiple

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.

ESG Integration Score

A quantitative rating assessing how thoroughly environmental, social, and governance factors are incorporated into a fund's or company's investment process and operations.

Enterprise Sales Cycle

The longer, more complex sales process typically required to close deals with large organizations.

Enterprise Value

The total value of a company including equity and net debt — a more complete measure of company value than market cap alone.

Enterprise Value (EV)

A company's total value including equity, debt, and cash — a more comprehensive measure than market capitalization alone.

Enterprise Value to Revenue

A valuation multiple that compares a company's total enterprise value to its annual revenue, commonly used to benchmark SaaS and tech companies.

Exit Multiple

The ratio of exit value relative to the invested capital.

Expansion Revenue

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%.

Fair Value

The estimated market value of an investment, used by VC funds to mark portfolio companies on their books between financing events.

Free Cash Flow

Cash generated by a business after accounting for capital expenditures — a measure of true financial health and the basis for many valuation models.

GAAP Revenue

Revenue recognized according to Generally Accepted Accounting Principles, which may differ significantly from bookings or cash received.

GAAP vs. Non-GAAP

The difference between standardized accounting principles (GAAP) and company-adjusted metrics that exclude certain items for a 'cleaner' view of performance.

GRR

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%.

Graduation Rate

The percentage of a fund's portfolio companies that successfully raise the next round of financing, indicating deal quality and portfolio momentum.

Gross Burn

The total amount of cash a company spends each month across all operating expenses, before any revenue is subtracted.

Gross Margin

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.

Gross Revenue Retention

The percentage of recurring revenue retained from existing customers over a period, excluding any expansion revenue from upsells — measures pure churn.

Gross TVPI

Total Value to Paid-In capital before deducting management fees and carried interest, showing the fund's raw investment performance multiplier.

Growth Inflection

The point where revenue or user growth accelerates significantly.

Hypergrowth

Extremely rapid startup growth, often defined as 100%+ annual revenue expansion.

IRIS+ Metrics

A standardized catalog of impact performance metrics maintained by the GIIN, used by impact investors to measure and compare social and environmental outcomes across investments.

IRR

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.

IRR Bridge

A waterfall that decomposes the change in a fund's internal rate of return between two measurement dates into the drivers that produced it.

Impact Measurement Framework

A structured system for quantifying and reporting the social or environmental impact of investments alongside financial returns.

Implied Valuation

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.

Inflection Point

A moment when a company's growth trajectory accelerates significantly due to product-market fit or scaling.

Internal Rate of Return (IRR)

The annualized return rate that makes the net present value of all cash flows equal to zero — the standard VC performance metric.

Key Metrics Dashboard

A reporting tool summarizing the most important performance indicators for a company.

Key Performance Indicator (KPI)

A measurable metric that tracks progress toward a critical business objective.

Kill Rate

The percentage of startups in a portfolio that fail or return less than invested capital.

LTV

Lifetime Value — the total revenue a business expects to earn from a single customer over the entire duration of their relationship.

MOIC

MOIC is multiple on invested capital: total value, realized plus unrealized, divided by the capital invested. It ignores time entirely.

MOIC

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).

MRR

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.

Magic Number

A sales efficiency ratio: the quarter-over-quarter change in recurring revenue, annualized, divided by the prior quarter's sales and marketing spend.

Mark-to-Market

Adjusting the carrying value of portfolio investments to reflect current market prices or estimated fair values.

Market Penetration

The percentage of a total market currently captured by a company.

Minimum Viable Traction

The early signals that indicate product-market fit may be emerging.

Monthly Active Customers (MAC)

The number of paying or engaged customers in a given month.

NAV Calculation

The process of determining a venture fund's Net Asset Value by valuing all portfolio holdings, adding cash, and subtracting liabilities and accrued fees.

NDR

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.

NRR

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).

Net Burn

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

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.

Net Revenue Retention

The percentage of recurring revenue retained from existing customers over a period, including expansion and contraction.

Operating Leverage

The degree to which a company can increase revenue without proportionally increasing costs, driving margin expansion at scale.

Operating Margin

Revenue minus operating expenses expressed as a percentage of revenue.

Organic Growth

Revenue or user growth achieved without acquisitions or paid marketing.

Payback Period

The time required for a company to recover its Customer Acquisition Cost (CAC) from the gross margin generated by that customer.

Payback Ratio

A measure of how efficiently a company recovers sales and marketing spend.

Pipeline

In sales: the total value of potential deals in progress. In VC fundraising: the pool of potential investors a startup is engaging.

Pipeline Conversion Rate

The percentage of potential deals that convert into paying customers.

Power Law Distribution

The mathematical phenomenon in venture capital where a tiny fraction of investments generate the vast majority of total fund returns, making individual outliers more important than portfolio averages.

Power User

Highly engaged users who derive significant value from a product and often influence others to adopt it.

Price Sensitivity

How strongly customer demand changes when pricing changes.

Product Stickiness

The likelihood that customers continue using a product due to habit or switching costs.

Product Velocity

How quickly a team gets a decision about the product into customers' hands, measured by delivery throughput rather than by activity.

Public Market Equivalent (PME)

A methodology for comparing VC fund returns against what the same capital would have earned in public markets.

RVPI

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.

Ramp-Up Period

The time it takes for a new sales rep, product, or market to reach full productivity.

Retention Rate

The percentage of customers who continue using a product over time.

Revenue Bridge

A waterfall that decomposes the change in revenue between two periods into named components that sum exactly to the difference.

Revenue Concentration

When a large share of revenue comes from a few customers.

Revenue Multiple

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.

Revenue Predictability

The reliability of future revenue projections.

Revenue Visibility

The predictability of future revenue based on contracts or subscription models.

Risk-Adjusted Return

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.

Rule of 40

A SaaS health metric: a company's revenue growth rate plus profit margin should equal or exceed 40%, balancing growth and profitability.

Rule of 40

The Rule of 40 says a healthy software company's growth rate plus its profit margin should add up to at least 40 percent.

Run Rate

Projected annual revenue based on current monthly or quarterly performance.

Runway

Runway is how many months a company can keep operating before its cash reaches zero: cash divided by monthly net burn.

SaaS Metrics

The standard set of KPIs used to evaluate software-as-a-service business performance.

Sales Efficiency

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.

Stale Pricing

When a portfolio company's valuation is based on an outdated funding round that no longer reflects current fair value.

TVPI

TVPI is total value to paid-in capital: distributions plus remaining net asset value, divided by capital contributed. It equals DPI plus RVPI.

TVPI

Total Value to Paid-In — the sum of distributions plus remaining portfolio value, divided by capital contributed. Includes both realized and unrealized returns.

Terminal Value

The estimated value of a business beyond the explicit forecast period, often the largest component of a DCF valuation.

Three-Statement Model

An integrated financial model linking the income statement, balance sheet, and cash flow statement.

Top Quartile

Funds whose returns rank in the top 25% of all funds from the same vintage year.

Total Addressable Market

The total revenue opportunity available if a product achieved 100% market share.

Total Contract Value (TCV)

The total revenue value of a customer contract including recurring and one-time charges.

Traction

Measurable evidence that a startup's product is gaining market adoption — revenue growth, user growth, retention, and engagement are common traction metrics.