Numbers tell a story, but only if you know which ones matter and how to present them. This week, NYU Summer Launchpad welcomed Andy Kangpan (Stern '13), Co-Founder and General Partner at Metalayer Ventures, a digital asset investment firm, for a session on the metrics investors use to evaluate startups. Andy framed the whole conversation from the investor's seat, which made for a usefully different kind of workshop.
The opening caveat was important: at the early stage, metrics are a guide, not the primary lens. Team and market story carry more weight when there isn't much data yet, the key questions investors are really asking are why this is the right team, and whether the market can produce a venture-scale outcome. But understanding the metrics framework still matters. It shapes how you build, what you track, and how you communicate progress to people writing checks. Knowing your numbers also signals something more basic: that you can actually run the business.
One practical note Andy offered before getting into the framework: do investor discovery before you pitch. Treat it like customer discovery: understand what each firm looks for at your stage and in your sector. Blogs, white papers, and informational interviews when you're not actively raising are all fair game. The founders who come in knowing what a particular investor cares about are already ahead.
Revenue: What Counts and What Doesn't
Revenue is recognized when the service is delivered, not when cash is received. A $120K annual contract generates $10K per month in recognized revenue, that's your MRR (monthly recurring revenue), or $120K in ARR (annual recurring revenue). Bookings are different: the total contract value signed. A three-year deal at $120K per year is $360K in bookings, but still $10K per month in recognized revenue. Conflating the two misrepresents where you actually are, and investors will notice.
MRR and ARR should include only recurring product and subscription fees. One-time hardware costs or installation fees don't belong in that figure, even if they show up on the same invoice. Mixing them in causes confusion. Revenue growth should be reported month-over-month and year-over-year as a percentage, both figures tell different parts of the story. What counts as an exciting growth rate varies by sector and firm, so when you're not actively raising, ask friendly investors for directional benchmarks in your space.
Gross Margin and Contribution Margin
Gross margin, which is revenue minus cost of goods sold, is one of the most signal-dense numbers in an early-stage business. The difference between a 55% and 85% gross margin business compounds dramatically at scale. Higher margin means more cash flow, less capital required to operate, and more room to reinvest in product and sales. Even if your margins are currently negative, investors want to see the picture of what they look like at scale. Model it out and be able to explain the path.
Contribution margin goes one level deeper: gross margin minus per-customer variable costs, like AWS or other infrastructure that scales with usage. It's more useful than gross margin alone for understanding per-customer economics, and for companies with significant variable infrastructure costs, it tells a truer story.
Customer Acquisition Cost (CAC)
CAC covers the full cost to acquire a customer, ads, referrals, discounts, sales team salaries, software. There are two ways to report it, and the distinction matters.
Paid CAC divides marketing spend by customers acquired through paid channels only. Blended CAC folds in organic acquisition and looks better on paper, but it masks how efficient your paid channels actually are. Andy's recommendation was to know both and be transparent about which you're reporting.
In enterprise contexts, CAC is more directional, sales cycles are long, contract values vary, and precision is harder. The more relevant questions are who you're selling to, how long the cycle is, and what the contract value looks like. For founder-led sales at the earliest stage, it's less critical to be exact, but worth understanding directionally. One broader point Andy made: CAC tends to rise over time as markets get more competitive. Early adopters are cheaper to reach; as competition grows, acquisition costs follow. Ride-share and consumer banking are the canonical examples.
Lifetime value (LTV), Payback Period, and Capital Efficiency
Lifetime value is monthly revenue per customer multiplied by contribution margin multiplied by average customer lifespan, with lifespan estimated from your monthly churn rate. The LTV-to-CAC ratio should be well above 1x. Above 1 means you're making money on each customer; in practice, investors want to see a meaningful multiple.
At the early stage, though, Andy was candid: LTV is largely theoretical. You don't have enough history to know how long customers will actually stay. Payback period is more actionable. It measures how long it takes to recover your CAC from contribution margin, shorter payback means less capital required to grow and a faster reinvestment cycle into sales and marketing. A 12-to-24 month payback period implies a heavy, ongoing capital requirement. That's not necessarily fatal, but investors will want to understand the funding implications.
For enterprise businesses, the magic number is worth tracking: new ARR generated in a quarter relative to sales and marketing spend in the prior quarter. Above 1x means your go-to-market is generating more than it costs. That's the target.
Product Metrics: Users, Churn, and Retention
Before reporting any user numbers, define what "active" means for your product. It's a basic step that gets skipped constantly, and it makes your numbers hard to interpret. Report daily active, weekly active and monthly active users (DAU, WAU, and MAU) where relevant, the DAU/MAU ratio signals depth of engagement, how often users come back relative to how many are nominally on the platform.
Track user growth with an eye toward source and quality, not just the headline number. Where are users coming from? Are they genuinely engaged? What are reactivation rates? Collapsing everything into a single net figure hides important dynamics.
On churn, there are two figures worth reporting separately. Gross churn is the absolute revenue or customers lost monthly. Net revenue retention (NRR) accounts for expansion revenue from existing customers, a business with some churn can still have positive NRR if customers who stay are spending more over time. That's a meaningful distinction for investors evaluating retention quality.
Cohort analysis is the tool that ties this together: tracking retention of user groups acquired in the same period over time reveals whether product improvements are actually working, or whether you're masking churn with new acquisition. It also helps identify which cohorts perform well or poorly and why. Andy was direct on this point: if you can only report a single retention number without cohort history, it signals poor understanding of your own business.
For hardware companies, the relevant metrics shift. Churn and retention are less applicable to the device itself, investors will ask about return rates and volume sold instead. The long-term model Andy pointed to as a reference: hardware at near-breakeven, with a recurring software or subscription layer on top. Nanit is the example worth studying.
The Bigger Picture
Andy closed with the same note he opened on: at the early stage, the metrics matter less than the story, the team, and the market. But knowing this framework changes how you build. It shapes what you instrument, what you optimize, and how you talk about progress in a way that investors can actually evaluate. The founders who come in with a clear command of their numbers, even when those numbers are small, signal something important about how they think about their business and how well they actually know it.
The Summer Launchpad accelerator workshop series continues throughout the summer. Stay tuned for more recaps from the NYU Leslie Entrepreneurial Institute.
