How to Prove Your Startup’s Growth Potential

Lighter Capital
Apr 5, 2016
1 min read

Updated: May 6, 2024

Fundraising is one of the toughest tasks you’ll take on as a startup founder and entrepreneur. One way to make it easier is to line up the key components you need to tell a good story about your company’s growth. Growth metrics are key to a successful pitch and story.

Once you’ve connected with potential investors and piqued their interest, the next step is sharing specific data about your company. In addition to financials, investors want to see metrics that demonstrate your company is growing and on a path to profitability.

Investors will ask questions about the strength of your customer base and revenue growth, how much churn your company is experiencing, your customer acquisition cost (CAC) ratio and customer lifetime value (LTV), and if you are approaching product-market fit.

The table below summarizes key tech startup growth metrics and how different types of investors and lenders view them.

	Traditional Debt Investors	Revenue-Based Financing Lenders	Equity Investors
Customers	A strong and diversified customer base is important. Need to see consistent payment from customers	Require more than 4 customers with growth year-over-year	Customer growth is critical, since product-market fit is a major stepping stone equity investors want to see
Churn	Not applicable	Less than 20% for sales to large enterprises, and 20-40% for sales to SMBs	Less than 20% for sales to large enterprises, and 20-40% for sales to SMBs
CAC Ratio	Not applicable	Depends on the LTV of your customers	Love to see CAC of 1 or better
Customer Lifetime Value	Not applicable	Higher than the cost to acquire	Depends on the investment horizon of the investor
Product Market Fit	Not applicable	Need to see sustainability and adoption of product in the specific markets	Large definable market and clear differentiated space is required