How to measure the right KPIs as you track your startup's growth

There are many different ways to analyze a startup — understanding its product-market fit, assessing core competencies, identifying competitive gaps, etc. But quantifying a startup’s goals and understanding how it tracks against its core objectives and goals comes down to a handful of metrics that can be identified according the business. We call these metrics key performance indicators, or “KPIs” for short.

Tracking KPIs is crucial for founders, not just because it helps them better understand how their business is performing and what it would take to scale, but also because it can play a major role in attracting investment from VCs — many of whom are highly data-oriented. Here, we’ll explore the importance of KPIs for startups, provide some KPIs that startups should consider measuring, and explain how founders can go about tracking KPIs.

Again, KPIs are metrics that relate to how a startup is progressing towards its high-level objectives and key results (“OKRs”). Examples of common KPIs include customer acquisition cost (CAC), daily active users (DAUs), and monthly burn rate — but more on these later.

KPIs should not be conflated with just any business performance metric. Typically, startups will track hundreds of datapoints to gain insight into the performance of various business functions (sales, marketing, etc.). A combination of these datapoints will often role up into a single KPI, which is measured over a particular period of time. For example, a KPI for the marketing function may be to lower customer acquisition cost by 10% in a business quarter. The marketing team may then track a variety of metrics (e.g., marketing spend, net new customers, return on ad spend, etc.), to determine CAC and measure how the team is tracking against that goal.

Keep in mind, KPIs can either be quantitative — again, based on a percentage or dollar amount change, for example — or boolean. In the case of the latter, a KPI wouldn’t track against a scale but rather would be binary, meaning they only have two possible results: achieved or not achieved. An example of this might be shipping a new landing page as part of an objective to increase adoption of a particular feature or product. Rather than setting a performance metric for the yet-to-be-launched page, you might opt to create a boolean KPI where success is simply determined by getting the page live.

In general, numeric KPIs tend to be more prevalent than boolean KPIs, mostly because they offer richer business insights, allowing you to track progress, create benchmarks, and analyze your performance on a more granular level.

KPIs allow a founder to understand and explain their business, as well as chart its current trajectory. Additionally, having a grasp on the key metrics related to the business allows founders to make more effective decisions. For example, if a startup releases a new design for its app and notices an increase in daily active users (DAUs) month-over-month, it might indicate the business should invest more in improving UX.

KPIs are also important to would-be investors, who often require an in-depth look at these metrics to determine if the business will be able to execute on its stated mission. VCs want founders to demonstrate they have a deep understanding of the core drivers of the business so they can work to improve them.

A business that doesn’t track KPIs risks operating on instinct or personal preference, which could cause the startup to make uninformed decisions rather than strategic ones backed by data.

KPIs and OKRs are two of the most commonly used frameworks in startup management — and two of the most commonly confused. 

OKRs (Objectives and Key Results) are a goal-setting framework. They define where you want to go (the Objective) and how you'll know you've gotten there (the Key Results). OKRs are typically ambitious and time-bound — set quarterly or annually — and are designed to push teams toward meaningful, often stretch-level outcomes.

Example: Objective: Become the go-to tool for operations teams at 10–50 person companies

• Key Result 1: Increase 8-week retention for the ops-team persona from 32% to 50%
• Key Result 2: Achieve an NPS of 45+ among active users in this segment
• Key Result 3: Sign 30 new design partner agreements with target-profile companies

What's a KPI in this context? A KPI is simply a metric. NPS, retention, and design partners are all KPIs within that OKR. But without the OKR framing, they'd just be numbers on a dashboard — no direction, no ambition, no ownership.

One useful shorthand: KPIs tell you how you're performing right now. OKRs tell you why it matters to get somewhere specific, by when. Here’s how they look side by side:

How they work together 

The most effective startups use both. OKRs describe the destination; KPIs tell you whether the engine is running well on the journey there. A KPI without an OKR can be tracked forever without ever driving improvement. An OKR without underlying KPIs has no way of measuring whether you're actually making progress.

The practical recommendation: choose 3–5 company-level OKRs per quarter, and identify 2–4 KPIs that serve as the key results within each. The KPIs you choose should be ones that, if they move in the right direction, you're confident the objective is being achieved.

Key performance areas vs. key performance indicators: what's the difference?

Another source of confusion is the distinction between Key Performance Areas (KPAs) and Key Performance Indicators (KPIs). These terms are sometimes used interchangeably, but they operate at different levels of specificity.

Key Performance Areas (KPAs) are the broad functional domains of your business where performance matters most. They represent the categories of work — not the measurements. Think of them as the "rooms" in your business.

For a startup, common KPAs include: Revenue Growth, Customer Acquisition, Product Engagement, Team & Operations, and Financial Health.

Key Performance Indicators (KPIs) are the specific, quantifiable measurements within each KPA. They are the actual metrics you track. Think of them as the "instruments" in each room.

Example:

The practical implication: when you're deciding which KPIs to track, start by identifying your key performance areas — the domains that matter most for your business right now. Then choose 2–4 KPIs within each KPA that give you the clearest signal about performance in that area. This prevents the common mistake of tracking dozens of disconnected metrics without understanding how they relate to each other or to your actual priorities.

One of the most common mistakes founders make is tracking the same metrics regardless of their stage — or worse, tracking what they've seen other companies track without asking whether those metrics are relevant to where they actually are. 

The KPIs that matter most evolve significantly as your company grows.

Pre-seed / Pre-launch Primary question: Is there a real problem, and does my solution resonate?

At this stage, you don't have enough users or revenue to make most quantitative KPIs meaningful. The focus is on qualitative and early engagement signals.

Key KPIs to track:

• Customer interview completion rate — Are you talking to enough potential users? Target: 20–50 problem-discovery interviews before building
• Waitlist sign-up rate and referral rate — Are people excited enough to join a list and share it? Early organic demand signal
• Sean Ellis survey score (if you have early users) — What % of active users would be "very disappointed" if your product went away? Threshold: 40%+ for PMF signal
• Activation rate — Of users who try your MVP, what % complete the core action?
• Session depth / usage frequency — Are early users coming back without being prompted?

What to avoid: Total sign-ups, social followers, press mentions — none of these indicate whether your product actually solves the problem.

Seed stage Primary question: Can I acquire customers consistently, and are they staying?

You have early product-market fit signals and are starting to spend on growth. Now quantitative unit economics start to matter.

Key KPIs to track:

• Customer Acquisition Cost (CAC) — How much does it cost to acquire a paying customer? Track paid CAC and blended CAC separately
• CAC payback period — How many months until you recover the cost of acquiring a customer? Target: <18 months for SaaS
• LTV:CAC ratio — Is the lifetime value of each customer significantly greater than the cost to acquire them? Target: 3:1 or higher
• 8-week or 90-day retention — Are users still active 8–12 weeks after signing up? Flattening retention curve is a strong PMF signal
• MRR and MoM growth rate — Is your recurring revenue growing consistently? Early-stage target: 10–15%+ month-over-month
• Churn rate — What percentage of customers are leaving each month? Target: <3% monthly for B2B SaaS
• NPS — Are customers willing to recommend you? Target: 30+

What to avoid: Optimizing ARR at the expense of understanding why customers churn. Leaky retention is more dangerous than slow acquisition.

Series A Primary question: Do the unit economics work at scale, and can I build a repeatable growth engine?

Investors at this stage are evaluating whether the business is fundamentally sound and whether you understand the levers that drive it. KPIs shift from directional signals to comparable benchmarks.

Key KPIs to track:

• Net Revenue Retention (NRR) — Is your existing customer base growing or shrinking in revenue? Target: >100% (ideally >110–120% for SaaS)
• Gross margin — After the cost of delivering your product, what's left? Target: >60% for SaaS; >40% for marketplace or hardware-heavy models
• LTV:CAC ratio — At scale, is the ratio improving or deteriorating? Series A investors want to see 3:1+ and improving
• Burn multiple — How much are you spending to generate each dollar of net new ARR? Target: <2x (under $1 in burn per $1 of new ARR is exceptional)
• Sales efficiency / Magic number — For every dollar spent on sales and marketing, how much net new ARR is generated? Target: >0.75
• Revenue growth rate (YoY) — Series A investors expect 2–3x year-over-year growth at minimum for most categories
• Headcount efficiency — ARR per FTE is a useful benchmark; at Series A, target $150K–$200K ARR per employee for SaaS

What to avoid: Showing growth without demonstrating awareness of the efficiency story. Investors in 2025 are closely scrutinizing burn multiple and operating leverage alongside raw growth.

Growth stage (Series B and beyond) Primary question: Can I sustain growth efficiently while building toward profitability?

KPIs at this stage shift from proving the model to proving it can scale efficiently. Investor focus moves to durability, not just growth.

Key KPIs to track:

• Rule of 40 (for SaaS) — Revenue growth rate + profit margin should equal 40% or more. Companies above 40 are considered financially healthy at scale
• NRR as a growth lever — At scale, NRR above 120% means you can grow revenue without acquiring a single new customer
• Contribution margin — Unit-level profitability after variable costs; should be improving quarter over quarter
• Customer health score — A composite leading indicator of renewal and expansion risk across your customer base
• Payback period trends — Is CAC payback getting shorter (improving efficiency) or longer (scaling inefficiency)?
• Net new ARR vs. churned ARR — You want net new ARR to be growing faster than churned ARR by a widening margin

Quick reference: KPI priorities by stage

The “right” KPIs to track depend on the nature of the business. However, it helps to bucket KPIs into a few different categories so founders can understand their value and determine the right metrics to track accordingly.

Bernard Marr, a best-selling author and thought leader in the realms of tech and business, thinks about KPIs in six different categories: opportunity, income, customer acquisition, funding health, customer engagement, and loyalty. From there, you can break down each category further to start thinking about the more granular metrics that could inform a higher-level KPI measurement. Here are examples of particular metrics that might fall into each KPI category:

• Opportunity: TAM and market size
• Income: monthly recurring revenue (MRR), annual recurring revenue (ARR), and profit margin
• Customer acquisition: customer acquisition cost (CAC) and churn
• Funding health: burn rate and runway
• Customer engagement: active users
• Loyalty: retention rate and net promoter score (NPS)

While all categories are important to track, there might be some that are more meaningful depending on the type and stage of the business. It’s important for founders to think critically about what will make their business succeed, and base their KPIs around that. For example, an early-stage company will likely have different KPIs than an enterprise organization. When the company is still searching for product-market fit, they may weigh DAUs more heavily than a longer-term metric like customer lifetime value (LTV). Once the business finds product-market fit, they can then focus on optimizing unit economics or focusing on metrics like LTV, CAC, and CAC to LTV ratio.

Additionally, note which KPIs are lagging indicators of success as opposed to leading indicators. Lagging indicators measure something that already happened (e.g., MRR), whereas leading indicators inform you where the business may be headed (e.g., conversion rates).

Finally, don’t overwhelm yourself with datapoints. Focus on fewer high-quality KPIs to measure each OKR — maybe three or four. More than that and it becomes difficult to stay focused on what the priority is.

Understanding which KPIs to track and actually tracking them are two entirely different workflows. The latter requires a software stack that provides a birds-eye-view of all the data related to a business’s performance. This may mean setting up integrations (because different KPIs are tracked via different platforms), custom dashboards, and automated reports from tools like Salesforce, Google Analytics, and Metabase.

It’s also helpful to visualize key metrics, as people retain visuals better than numbers. A good system will automatically pull all relevant KPIs upon request and at necessary intervals (monthly, quarterly, annually), make it easy to share the KPIs with stakeholders, and iterate on those KPIs as business goals evolve. Consider creating a data analytics dashboard using your platform of choice — Amplitude, Metabase, Tableau are all good options. You can also keep it simple with a report built in Google’s Looker Studio. The key is to create an easy-to-use dashboard that you can leverage regularly to pull performance numbers and report on progress with minimal manual work each time.

Ongoing tracking can then take place in a simple Google spreadsheet, where team members can collaborate and update KPIs for the projects that they’re owning.

KPIs should be reviewed at a regular cadence to ensure they’re still measuring the factors that matter most to your business’s success. With some degree of rigor around determining and tracking KPIs, the path towards growth should become clearer. Then it’s simply a matter of execution.