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2 resources from a16z.com we point founders to, and the questions each answers.

📄 Article
✓ Link checked Free Intermediate

Why we picked it The canonical investor's-eye view of why LTV:CAC drives valuation, and why 3:1 became the rule of thumb. Read it to understand what a growth-stage investor is really testing when they poke at your unit economics.

Why Do Investors Care So Much About LTV:CAC?

From a16z.com by Andreessen Horowitz (a16z)

  • LTV should be computed on gross/contribution profit, not revenue.
  • Roughly 3x LTV:CAC signals efficient sales-and-marketing returns.
  • Higher LTV:CAC compounds into higher margins and higher valuation.
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Answers How do I calculate CAC, and what's the difference between blended CAC and new-customer CAC? What's a good LTV:CAC ratio, and when is my D2C brand actually profitable?
📄 Article
✓ Link checked Free Intermediate

Why we picked it The classic investor vocabulary for CAC, LTV, gross margin and the metrics that get misused in decks. Even though it's SaaS-flavoured, it's the shared language your investors speak, so it pays to know exactly what each term means and how it gets gamed.

16 Startup Metrics

From a16z.com by Andreessen Horowitz (a16z)

  • Precise definitions for CAC, LTV, gross margin and burn.
  • Common ways founders unintentionally misstate each metric.
  • The baseline vocabulary investors expect you to use correctly.
Open a16z.com →
Answers What's a good LTV:CAC ratio, and when is my D2C brand actually profitable?
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