What does an investor read first in your unit economics?

Why the order an investor reads in matters

In our experience the decision starts before the meeting. An investor who has read your deck already knows whether you fit their mandate and their cheque size, and an experienced one arrives with a checklist in their head. We think the first three minutes of the meeting decide more than founders expect.

Andreessen Horowitz, the investment firm, set out a reading order in 2015, in its own guide to startup metrics. Investors, the authors wrote, often looked at revenue and bookings first, to gauge the size of the business, then at growth, and those basics, if interesting, made them look further. They added that a founder can present the numbers in any order. So the order is the investor's, and knowing it tells you which numbers have to be ready, and checked, before the first call.

The same guide also warned that people may use different definitions of the same metric, which makes the health of a business hard to read. Lifetime value was one of the numbers they flagged. Built on revenue or gross margin, it suggests a higher limit on what you can spend to win a customer than when it is built on the profit a customer actually contributes. Write the formula next to every number you show, and use the same one every month.

When we read a company's numbers, we look for founders who can tell the company's story with them, without an accountant, a full-time CFO or a live dashboard, and who have a thoughtful answer for each number, including the ones they do not have yet. Read in order, the ten numbers below are that story.

The ten numbers, in the order we read them

These ten come from the money questions in our startup assessment, which each co-founder answers alone. We read them in this order because each one leans on the one before: what comes in, whether it stays, who pays, what a customer costs to win, what the company burns, how long the cash lasts and what the next round has to buy. With revenue, you can work out every one of them from your own records and plans.

The examples use one illustrative company: 60,000 EUR of revenue last month, 130,000 EUR of spending and 600,000 EUR in the bank.

1. Revenue last month

The company's total revenue in the last full month, with the recurring part shown apart. Stripe's guide to SaaS metrics calculates ARR from recurring revenue only, leaving out one-off payments and professional services. In the example: 60,000 EUR.

2. Growth over six months

Our assessment asks for revenue in the same month six months earlier. Andreessen Horowitz wrote in 2015 that investors often preferred the compounded monthly growth rate to a simple average: (latest month / first month) to the power of 1 / months, minus 1. From 47,400 EUR to 60,000 EUR over six months is about 4.0% a month, and 26.6% in all.

3. The share of revenue that recurs

How much of last month's revenue comes in again next month without a new sale, divided by last month's revenue. The same 2015 guide said investors valued companies more highly when the majority of revenue came from the product, because services revenue was non-recurring, had much lower margins and was less scalable. In the example, 51,000 of 60,000 EUR recurs: 85%.

4. Customers who stay, and what they pay

Of the customers who were paying six months ago, the share still paying today, and whether those same customers now pay more, the same or less. Stripe's net revenue retention starts from existing customers' recurring revenue, subtracts churn and downgrades, adds upgrades and leaves new customers out. Its guide warns that a high figure can hide lost customers, so read it next to the head count: in the example, 40 of 46 customers still pay, or 87%.

5. Your largest customer's share

The share of the last three months' revenue that came from your single largest customer. Stripe's guide to SaaS metrics calls a high concentration risky, because losing one customer would cut revenue hard. In the example the company billed 173,166 EUR over three months, and its largest customer paid 13,000 EUR of it: 7.5%.

6. Paying customers and average deal size

How many customers paid you in the last three months, and your average contract value. The 2015 guide's first question about annual contract value was its size: a few hundred dollars a month from each customer, or large deals. In the example, 48 customers at an average of 15,000 EUR a year each make 60,000 EUR a month.

7. What a customer costs to win, and how long it takes

What it cost to win one paying customer through your main channel, and your average sales cycle in months. Stripe's 2024 guide to CAC payback divides CAC by the monthly profit per customer to get the payback period. The 2015 guide said investors weighed paid CAC above a blended figure. In the example, a CAC of 4,500 EUR, 1,250 EUR of monthly revenue per customer and 250 EUR a month to serve them gives a payback of 4.5 months, on a sales cycle of three months.

8. Net burn

Total spending last month minus revenue last month. J.P. Morgan's guide defines the burn rate that way, and the 2015 guide said investors focused on net burn and on how fast revenue and costs were growing. In the example: 130,000 minus 60,000 is 70,000 EUR a month.

9. Runway, and the date you cut costs

Cash in the bank divided by net burn, with no fundraising counted in, as J.P. Morgan's guide puts it. In the example, 600,000 divided by 70,000 is about 8.6 months. Our assessment also asks for the month you will cut costs if the money you expect has not arrived. The same 2024 guide says investors look more cautiously at startups with less than six months of runway, so that date belongs next to the runway figure.

10. The round

How much you are raising, in what structure, the month you expect to close, the milestones it pays for over the next six quarters, and how much equity and debt you have raised so far. In the example: 1,500,000 EUR in a priced round, after 900,000 EUR of equity raised to date and no debt. Hold them next to the nine above, to check that the money buys the result.

How to use this page with your co-⁠founders

Answer alone first, then compare. We recommend that every co-founder does this kind of honest check separately, before anyone sees the others' answers.

1. Each co-founder, alone, writes down all ten numbers for the last full month, with the formula they used.
2. Put the sheets side by side. Where two of you wrote different figures for the same line, find out whether you used different definitions, different months or different spreadsheets, and agree on one formula.
3. For each number, write one sentence on what it says about the company. Then read the ten sentences in order. If the story breaks at one of them, that is the number to work on before an investor reads it.
4. For any number you cannot answer yet, write down what you know, how you would estimate the rest and when you will have the real figure.
5. Do it again every quarter, on a date in the calendar that nobody moves.

Our startup assessment is built the same way. Each co-founder answers separately, and the team report shows the team average, the alignment per dimension and your answers side by side.

Work through it with us

TBHM Growth is a four-week online programme for founders whose company has revenue, paying customers and six to eight months of runway. Pre-revenue companies are not accepted. Week three is on the fundamentals of fundraising, and its session on the numbers works through acquisition cost, lifetime value, payback, gross margin, burn and runway, then the ten numbers an investor reads first. Another session that week covers how fundraising actually works, what dilution costs you and when not raising is the better answer.

The programme has eight live sessions on Zoom, four private 30-minute mentor calls, ten startups per cohort and a one-page written verdict within a week of the end. It costs 1,200 EUR per company, VAT included, co-founders join at no extra cost, and it takes no equity. See if TBHM Growth fits your company.