Startups need to demonstrate their value to attract investment. Key performance indicators (KPIs) can provide a comprehensive picture of a startup’s health and potential, making it easier for investors to see the company’s value. Here are 20 essential KPIs tech startups should consider:
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1. Revenue Growth
Revenue growth is a foundational metric that shows the startup’s ability to scale. Investors look for consistent and significant revenue growth over time.
2. Customer Acquisition Cost (CAC)
CAC indicates how much it costs to acquire a new customer. Lower CACs are generally more attractive to investors.
3. Lifetime Value (LTV) of Customers
LTV is the total revenue a business expects from a customer over the customer’s lifetime. A high LTV signifies a sustainable business model.
4. Customer Lifetime Value to CAC Ratio
The LTV/CAC ratio compares the lifetime value of a customer to the cost of acquiring that customer. A ratio of 3:1 or higher is generally desirable.
5. Gross Margin
Gross margin shows the difference between revenue and the cost of goods sold, indicating profitability.
6. Operating Margin
Operating margin is the operating income divided by net sales, providing insight into operating efficiency.
7. Burn Rate
The burn rate measures the rate at which a startup spends its cash. A lower burn rate is often more favorable to investors.
8. Churn Rate
Churn rate is the percentage of customers who stop using a product or service. Low churn rates indicate customer satisfaction.
9. Conversion Rate
Conversion rate is the percentage of users who perform a desired action, such as making a purchase. High conversion rates can signal a strong value proposition.
10. Daily/Monthly Active Users (DAU/MAU)
DAU/MAU shows the number of users actively engaging with the product daily or monthly. High DAU/MAU signifies a strong user base.
11. Net Promoter Score (NPS)
NPS measures customer loyalty and advocacy. A high NPS means customers are likely to recommend the product.
12. Average Revenue per Paying User (ARPU)
ARPU indicates the revenue generated per paying user. It helps in understanding the monetization efficiency.
13. Customer Retention Rate
Customer retention rate is the percentage of customers who continue to use the product over a given period. High retention rates suggest customer satisfaction.
14. Cost per Lead
Cost per lead measures the cost associated with acquiring a new lead. Lower cost per lead signifies efficient marketing strategies.
15. Return on Advertising Spend (ROAS)
ROAS measures the profit generated for each dollar spent on advertising. High ROAS indicates effective ad spending.
16. Time to Market
Time to market is the time it takes to develop and release a new product. Shorter times to market can signal agility and innovation.
17. Total Addressable Market (TAM)
TAM estimates the total revenue potential for the product if it achieves 100% market penetration. A large TAM can be very attractive to investors.
18. Market Penetration Rate
Market penetration rate measures the percentage of the target market that has been captured by the startup. High penetration rates signify market share dominance.
19. Product Adoption Rate
Product adoption rate indicates the speed at which users adopt the product after it is launched. Quick adoption rates suggest a market fit.
20. Customer Satisfaction (CSAT)
CSAT measures how satisfied customers are with the product. High CSAT scores indicate a strong product-market fit and customer loyalty.
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By focusing on these key performance indicators and leveraging programs like Dev Centre House Ireland’s startup program, you can position your tech startup as a valuable and attractive investment opportunity for potential investors.
