Startup finance benchmarks: published conventions, not our data
Nothing on this page comes from Plainhub customers. Each range is an outside convention, an investor's rule of thumb or a published framework, with its source named under it where one exists. They tell you what investors and diligence teams tend to treat as normal, which is useful context and not a target your company has to hit.
Every row links to the full definition with its formula and a worked example. Metrics with no range that holds across markets, like CAC, have no row.
ARR
ARR = MRR × 12The venture-scale reference is T2D3: from about €1M ARR, triple it twice, then double it three times, reaching €100M around year five (Neeraj Agrawal, 2015).
Burn multiple
burn multiple = net burn / net new ARRUnder 1x exceptional · 1 to 1.5x great · 1.5 to 2x good · 2 to 3x suspect · above 3x trouble past seed.
Source: David Sacks, “The Burn Multiple” (Craft Ventures, 2020)
CAC payback period
CAC payback = CAC / (ARPA × gross margin)Under 12 months is generally considered healthy for SaaS.
Churn rate
customer churn = customers lost / customers at startSMB SaaS commonly runs 3 to 5 percent monthly. Products sold to larger companies target under 1 percent.
Gross margin
gross margin = (revenue − cost of revenue) / revenueSoftware businesses typically run 70 to 85 percent. Services and hardware run considerably lower.
No linked source: treat it as a common rule of thumb.
LTV:CAC ratio
LTV : CAC = lifetime value / customer acquisition cost3:1 is the widely used target. Below 1:1 every customer loses money. Above 5:1 often means underspending on growth.
MRR
MRR = number of active accounts × average revenue per accountPaul Graham's yardstick for YC-stage startups: 5 to 7 percent growth a week is good, 10 percent is exceptional. Most companies at that stage measure it on MRR.
Net revenue retention
NRR = (starting MRR + expansion − contraction − churn) / starting MRRAbove 100 percent means the existing base grows without new customers. Best-in-class B2B SaaS reaches 120 percent or more.
Above 30 percent from one customer is commonly treated as a material risk in diligence.
No linked source: treat it as a common rule of thumb.
Rule of 40
Rule of 40 score = revenue growth rate (%) + profit margin (%)40 is the accepted pass line. Brad Feld, who published the rule in 2015, framed it as applying from roughly $1M of ARR upward; below that scale, growth rates swing too wildly for the sum to mean much.
Source: Brad Feld, “The Rule of 40% For a Healthy SaaS Company” (2015)
Runway
runway (months) = cash on hand / net monthly burnMost investors expect 18 to 24 months after a round. Below 6 months you are raising from a weak position.
No linked source: treat it as a common rule of thumb.
SaaS magic number
magic number = (this quarter's revenue − last quarter's revenue) × 4 / last quarter's S&M spendLars Leckie, who coined the metric, drew the lines that are still used: above 0.75, keep investing in the go-to-market; below 0.5, fix the model before spending more; in between, look deeper before deciding.
No linked source: treat it as a common rule of thumb.
SaaS quick ratio
quick ratio = (new MRR + expansion MRR) / (churned MRR + contraction MRR)Mamoon Hamid, who introduced the metric in 2015, set 4 as the bar for a healthy early-stage SaaS company. Below 2, growth is a treadmill: most of what sales wins, churn takes back.
No linked source: treat it as a common rule of thumb.
Ranges like these describe the companies their authors looked at, usually venture-backed software companies, often in the US. A services business, a hardware company or a bootstrapped one can sit outside them and be fine. To cite a range, link the anchor on the glossary page, next to the formula and the source.
Your own numbers, kept live
Plainhub computes runway, burn, MRR and revenue concentration from money you record in plain words, so the runway, MRR and concentration rows are a glance away. Ratios like LTV:CAC or the magic number you still work out with the calculators linked above.