Metrics & Performance
Last updated
Quick Answer
The difference between standardized accounting principles (GAAP) and company-adjusted metrics that exclude certain items for a 'cleaner' view of performance.
GAAP (Generally Accepted Accounting Principles) are standardized accounting rules that all public companies must follow. Non-GAAP metrics are adjusted figures where companies exclude items like stock-based compensation, restructuring charges, or amortization to present what they consider a more accurate picture of operating performance. In venture, both early-stage and late-stage companies commonly use non-GAAP metrics.
In Practice
The Series C company reported $5M in GAAP losses but highlighted $2M in non-GAAP profit by excluding $7M in stock-based compensation from the calculation.
Why It Matters
The gap between GAAP and non-GAAP numbers can be enormous, especially at companies with heavy stock compensation. Investors who only look at non-GAAP metrics may overestimate profitability.
VC Beast Take
Non-GAAP is where companies hide the bodies. Always check what's being excluded before believing the adjusted numbers.
ARR: What Annual Recurring Revenue Means in Venture Capital
ARR (Annual Recurring Revenue) is the single most-watched metric in SaaS venture capital. Here's exactly what it means, how it's calculated, what benchmarks matter, and why VCs obsess over it.
The IPO Process Explained: Timeline, Steps, and What Founders Need to Know
Going public takes 18-24 months and involves underwriters, SEC filings, roadshows, and pricing negotiations. Here's the complete IPO process broken down step by step for founders.
Private Equity Fund Administration: What It Is and Who Does It
Fund administration is the back-office infrastructure that keeps a PE fund running. Here's what it covers, who the major providers are, what it costs, and how to choose the right one.
GAAP (Generally Accepted Accounting Principles) are standardized accounting rules that all public companies must follow. Non-GAAP metrics are adjusted figures where companies exclude items like stock-based compensation, restructuring charges, or amortization to present what they consider a more...
Understanding GAAP vs. Non-GAAP is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
GAAP vs. Non-GAAP falls under the metrics category in venture capital. This area covers concepts related to the quantitative measures used to evaluate fund and company performance.
Newsletter
Join thousands of founders and investors. Every Tuesday.
The VC Beast Brief
Master VC terminology
Get smarter about venture capital every week. Our newsletter breaks down the terms, concepts, and strategies that matter.
VentureKit
Ready to launch your fund?