Finance

In the intricate world of venture capital (VC), term sheets often contain clauses that are not immediately intuitive but play a critical role in protecting investor interests. One such clause is the ratchet. Understanding the ratchet clause is crucial for both investors and entrepreneurs, as it can significantly influence the

Pre-Money vs. Post-Money Valuation: Why VCs Use Pre-Money Internally When venture capitalists (VCs) negotiate investment deals, they often highlight post-money valuation to founders—it’s a bigger number and tends to sound more impressive. However, behind the scenes, VCs rely on pre-money valuation for internal calculations and decision-making. One key

In venture capital (VC), investors and founders often negotiate detailed agreements to govern their relationship and protect their respective interests. Among these provisions, drag-along rights stand out as an essential mechanism for facilitating smooth exits. Although they might seem daunting, drag-along rights play a crucial role in ensuring that all

Customer Acquisition Cost (CAC) Payback Time is a critical metric for SaaS businesses and subscription-based models. It essentially tells you how long it takes for a new customer to generate enough revenue to cover the cost of acquiring them. Understanding and accurately calculating CAC payback time can help businesses better

Net Revenue Retention (NRR), also referred to as Net Dollar Retention (NDR), is a crucial metric that venture capitalists (VCs) use to evaluate the growth potential and long-term sustainability of a startup, particularly in SaaS (Software as a Service) or subscription-based business models. NRR measures how much revenue a company

In venture capital (VC), the LTV/CAC ratio is one of the most important metrics investors use to evaluate the long-term viability of a startup, especially for subscription-based businesses, SaaS companies, and direct-to-consumer (D2C) brands. This ratio compares the lifetime value (LTV) of a customer to the customer acquisition cost

In venture capital (VC), the traditional financial metric of Cost of Goods Sold (COGS) plays a somewhat different role compared to its usage in established industries. COGS, commonly used in accounting and financial analysis, refers to the direct costs attributable to the production of goods sold by a company. This

The Magic Number is another key metric used in venture capital, particularly for SaaS (Software-as-a-Service) companies. It measures the efficiency of sales and marketing spending in driving new revenue.

The burn multiple is a crucial metric for startups, particularly those in the fintech and SaaS industries, as it provides a clear snapshot of how efficiently a company is using its capital to drive revenue growth. By analyzing this ratio, founders, investors, and financial analysts can gauge a startup’s