Article · ~15 min read

16 Startup Metrics

Andreessen Horowitz (a16z) · a16z Free Intermediate

The reference primer on the metrics and market-sizing logic investors use, including bottom-up market sizing that keeps founders honest about how big a market really is. Canonical a16z source.

  • Size markets bottom-up from customer count and willingness to pay
  • Know the metrics that actually signal a healthy business
  • Distinguish real traction from vanity metrics
  • Use consistent definitions when comparing yourself to the market
Open on a16z.com ↗

It answers 16 questions

  1. What are unit economics and why do they matter?
  2. What is a SAFE and how does it actually work?
  3. How do I calculate CAC (customer acquisition cost) and LTV?
  4. What's the difference between a valuation cap and a discount on a SAFE?
  5. What tools should I use to track competitors and market landscape?
  6. What is a good LTV to CAC ratio?
  7. How is my startup's valuation actually decided at the early stage?
  8. What metrics should I actually track as an early-stage SaaS founder?
  9. What do the key terms in a term sheet actually mean?
  10. How do I size the market and figure out if it's big enough?
  11. How do I understand the competitive landscape for an Indian market specifically?
  12. What is churn and how much churn is too much?

And 4 more across the hub.

Read with it

  1. David Skok's For Entrepreneurs work is the foundational, near-universally cited source on SaaS unit economics and modeling.... forentrepreneurs.com Article · long-form reference SaaS Metrics 2.0, Detailed Definitions David Skok
  2. The primary source for the SAFE itself, plus YC's plain-English primer explaining post-money mechanics. Use the official... Y Combinator Tool · templates + primer YC Safe Financing Documents (Official Post-Money SAFE) Y Combinator
  3. A focused a16z piece on the single ratio that most captures a business's efficiency and drives its valuation. Great for... a16z.com Article · article Why Do Investors Care So Much About LTV:CAC? Andreessen Horowitz (a16z)
  4. David Sacks (PayPal, Yammer, Craft Ventures) distills the metrics that actually predict a SaaS company's health, including the... sacks.substack.com Article · essay The SaaS Metrics That Matter David Sacks
  5. The definitive book on how VC deals really work, written by two Foundry Group VCs. It demystifies the term sheet term-by-term... Wiley Book · book (~300 pages) Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist Brad Feld & Jason Mendelson
  6. YC's fundraising library collects the canonical explainers on how SAFEs convert, how caps and discounts work, and how they... Y Combinator Startup Library Article · varies A Guide to SAFEs, Caps, and Discounts (Startup Library) Kirsty Nathoo / Y Combinator
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