Sales Pipeline
A company’s sales pipeline represents the total expected / potential revenue opportunities for the business — from initial meetings or pilots through negotiations and deal closure. In simple terms, it’s a systematic way to monitor every potential sale’s progress and probability. Sales pipeline are typically broken down into defined stages (e.g. in discussions, signed LOI, pilot, contract negotiation, contract signed) — each opportunity is assigned a potential contract value, often paired with a probability percentage. Sales pipelines helps companies forecast revenue and optimize sales processes; most post-Series A B2B companies include a sales pipeline table or funnel in the traction section of their pitch deck. Key metrics that often supplement sales pipeline diagrams include pipeline velocity (how quickly deals move through stages), average conversion rates between stages, and pipeline coverage ratio (usually 3-5x quota). Pipeline health is crucial for meeting revenue projections and often influences both ARR forecasts and growth rate predictions. Modern pipelines often integrate with CRM systems and use data analytics to predict outcomes and optimize sales resource allocation.
Customer Churn
Customer churn is the rate at which customers stop paying or subscribing for a company’s services. For subscription and software businesses, churn is the percentage of customers who cancel or don’t renew. Churn is typically measured both in terms of customer count (logo churn) and revenue (revenue churn), with the latter being more critical for businesses with varying contract sizes. Churn directly impacts customer lifetime value and growth trajectories, making it a crucial factor when calculating company valuations.
Net Revenue Retention (NRR)
Net Revenue Retention is the percentage of recurring revenue retained from existing customers over time, after expansions, contractions, and churn. In simple terms, NRR shows whether your startup’s customer base is generating more or less revenue over time. A rate over 100% indicates that growth from existing customers exceeds losses from churn and downgrades. This metric is particularly important for SaaS companies, with top performers often exceeding 120% NRR. Strong NRR often correlates with higher revenue multiples and valuations.
Gross Margins
Gross margin (otherwise referred to as gross profit) describes the percentage of revenue remaining after direct costs of delivering a product or service. In practical terms, it’s the fraction of each sales dollar available to cover operating expenses and generate profit. For software companies, margins typically exceed 70%, while hardware or service-heavy businesses may have lower margins. This metric significantly influences valuation multiples and helps investors evaluate business model efficiency and scalability.
Unit Economics
The term “unit economics” refers to calculating a business or startup’s profitability on a per-unit basis (ie. per product sold for CPG brands, or per subscription for software & SaaS). Some of the unit economics metrics that startup founders often look at include customer acquisition cost, lifetime value, and delivery costs. Unit economics answer a simple question: does the business make money selling a given unit of product, or to a given customer? Founders track unit economics to optimize startup profitability and operatonal efficiency.
Proof of Concept (POC)
Proof of Concept is a limited-scope project or implementation that demonstrates the feasibility of a product or business model. In startup terms, it’s evidence that your solution works and delivers the intended value. POCs typically precede full commercial deployments and often involve beta customers, pilot programs or strategic partners. Successful POCs can validate key assumptions about technical feasibility, customer value, and market demand, supporting fundraising efforts and market entry strategies.
Minimum Viable Product (MVP)
A Minimum Viable Product is the simplest version of a product that can effectively deliver and test core value propositions with customers. Think of it as the leanest version that can start generating meaningful user feedback. A common pitfall among early-stage founders is to mistake an incomplete product, for an MVP: while an MVP may not necessarily be feature-complete, it must be a fully-working solution that delivers the intended value. MVPs focus on essential features that address the primary customer pain point, allowing rapid iteration based on market feedback. This approach helps validate demand and product-market fit while minimizing initial development costs and time to market.
Go-to-Market (GTM) Strategy
A Go-to-Market strategy is the comprehensive plan for acquiring customers, including target market selection, positioning, pricing, and distribution channels. Simply put, GTM is how you plan to reach and sell to customers. Almost every startup pitch deck (esp. Series A and beyond) should include a go-to-market slide. Effective GTM strategies align product capabilities with market needs and include clear customer segmentation, channel strategy, and scaling plans. The strategy typically evolves as companies validate assumptions about product-market fit and customer acquisition costs.
Revenue Model
A startup’s revenue model describes how it generates income from a product or service. Common revenue models include subscription, transactional, marketplace, and advertising-based businesses. Most businesses will seek to diversify revenue streams in order to mitigate volatility in key metrics like MRR, gross margins, and cash flow patterns. Founders should carefully consider customer preferences, industry dynamics, and sustainable growth when planning their revenue models and pricing. Revenue model is not be confused with business model, which goes beyond revenue and describes the entire value creation framework behind a business, including operational strategy, go-to-market, and positioning.
Growth Rate
A startup’s growth rate can be measured by the increase in a variety of metrics: revenue, customers, or users — typically year-over-year or month-over-month. In venture-backed companies, it often refers specifically to revenue growth. Growth rate is crucial factor when calculating valuation, with faster growth typically commanding higher revenue multiples. While growth rates vary by industry and market conditions, investors are usually looking for early-stage companies with higher growth rates that suggest asymettric upside potential (which is why the “hockey-stick graph” is the holy grail for startups).
Cohort Analysis
Cohort analysis is the study of user behavior patterns by grouping customers based on time periodsor shared characteristics. Startups typically use cohort analysis to track how different groups of customers behave over time. Common applications include analyzing retention rates, spending patterns, and feature adoption across different customer segments. This analysis helps identify trends in customer churn, lifetime value, and product engagement, informing product development and marketing strategies.