In the fast-paced world of startups, measuring performance accurately is essential for scaling, sustainability, and securing investment. Key Performance Indicators (KPIs) are quantifiable metrics that help startups track progress toward strategic goals.

This comprehensive guide outlines the top 20 startup KPIs—what they mean, how to calculate them, and why they matter.

Understanding Startup KPIs

KPIs are actionable, data-driven tools that provide insights into various aspects of a startup’s health, including financial performance, customer behavior, product engagement, and operational efficiency.

Unlike vanity metrics, KPIs are aligned with business objectives and provide meaningful insights to guide strategic decision-making. Depending on a startup’s model, market, and maturity, choosing the right KPIs—often referred to as "North Star metrics"—can significantly influence long-term success.

Top 20 Startup KPIs

1. Monthly Recurring Revenue (MRR)

What it is: Predictable monthly income from subscriptions or recurring sales.
Why it matters: Reflects revenue stability and growth, especially in SaaS models.
Formula: MRR = Total monthly recurring revenue.
Example: 100 customers × $50 = $5,000 MRR

2. Annual Recurring Revenue (ARR)

What it is: Yearly equivalent of MRR.
Why it matters: Crucial for long-term financial forecasting.
Formula: ARR = MRR × 12

3. Customer Acquisition Cost (CAC)

What it is: Average cost to acquire a new customer.
Why it matters: Measures marketing efficiency and profitability.
Formula: CAC = Total sales & marketing spend / New customers acquired
Example: $10,000 / 100 = $100 CAC

4. Customer Lifetime Value (LTV)

What it is: Total revenue expected from a customer over their lifespan.
Why it matters: Informs budget allocation for acquisition and retention.
Formula: LTV = ARPU × Gross Margin % × Average customer lifespan
Example: $50 × 0.8 × 24 = $960

5. Churn Rate

What it is: Percentage of customers lost in a given period.
Why it matters: High churn signals retention or satisfaction issues.
Formula: (Customers lost / Customers at start) × 100
Example: 50 / 1,000 = 5% churn

6. Burn Rate

What it is: Monthly cash spend before profitability.
Why it matters: Indicates runway and funding urgency.
Formula: Burn Rate = Monthly expenses
Example: $100,000/month

7. Cash Runway

What it is: Time remaining before cash runs out.
Why it matters: Helps in fundraising and cost control.
Formula: Cash reserves / Burn rate
Example: $1M / $100K = 10 months

8. Conversion Rate

What it is: Percentage of visitors taking a desired action.
Why it matters: Reflects marketing and product funnel effectiveness.
Formula: (Conversions / Visitors) × 100
Example: 50 / 1,000 = 5%

9. Activation Rate

What it is: Users who complete a key product milestone.
Why it matters: A strong predictor of retention.
Formula: (Activated users / Total users) × 100

10. Daily Active Users (DAU) / Monthly Active Users (MAU)

What it is: Unique users engaging daily/monthly.
Why it matters: Measures product engagement and stickiness.
Formula: Count of unique active users per day or month

11. Net Promoter Score (NPS)

What it is: Customer loyalty and satisfaction score.
Why it matters: High NPS correlates with organic growth.
Formula: % Promoters − % Detractors
Example: 60% − 10% = NPS of 50

12. Gross Profit Margin

What it is: Revenue left after deducting COGS.
Why it matters: Indicates pricing and production efficiency.
Formula: ((Revenue − COGS) / Revenue) × 100

13. Average Revenue Per User (ARPU)

What it is: Revenue per customer or account.
Why it matters: Evaluates user-level monetization.
Formula: Total revenue / Total users

14. Customer Retention Rate

What it is: Percentage of retained customers over time.
Why it matters: Sustained retention drives long-term growth.
Formula: ((End customers − New customers) / Start customers) × 100

15. Bounce Rate

What it is: Visitors who leave without engaging.
Why it matters: High rates may indicate UX or content issues.
Formula: (Single-page visits / Total visits) × 100

16. Total Contract Value (TCV)

What it is: Total value of a signed contract, including one-time and recurring fees.
Why it matters: Helps forecast sales revenue.
Formula: Sum of all contract revenues over the term

17. Annual Contract Value (ACV)

What it is: Average yearly revenue from a contract.
Why it matters: Useful for comparing deals and forecasting.
Formula: TCV / Contract duration (years)

18. Rate of Money Spent Per Month

What it is: Monthly expenditure rate (Burn Rate revisited).
Why it matters: Supports budgeting and planning.
Formula: Total monthly expenses

19. Email Open Rate (EOR) and Click-Through Rate (CTR)

What it is: Email engagement metrics.
Why it matters: Tracks effectiveness of email marketing.
Formula:

• EOR = (Emails opened / Emails sent) × 100
• CTR = (Clicks / Emails delivered) × 100

20. Visitor-to-Lead Conversion Rate

What it is: Website visitors converted into leads.
Why it matters: Measures success of lead generation efforts.
Formula: (Leads / Visitors) × 100

Choosing the Right KPIs for Your Startup

The most relevant KPIs depend on your business model, maturity stage, and strategic goals:

• Early-stage: Focus on user growth, activation, and product-market fit.
• Growth-stage: Prioritize retention, revenue growth, and LTV/CAC.
• Mature-stage: Emphasize efficiency, profitability, and scalability.

The North Star Metric—the single most important metric that reflects your core value—is especially useful for alignment. For example, Facebook’s North Star is DAU, while a SaaS product might choose MRR.

Why KPI Tracking Is Crucial

• Informed decisions: Base strategies on real-time data.
• Investor confidence: Metrics showcase traction and potential.
• Team alignment: Keeps everyone focused on what matters.
• Early issue detection: Spot problems before they escalate.
• ROI optimization: Invest in activities that yield measurable results.

Conclusion

KPIs are not just numbers—they are vital indicators of startup health and trajectory. The 20 KPIs listed above span financial metrics, customer behavior, engagement, and operations. By identifying and tracking the most relevant KPIs, startups can better align their teams, refine strategies, and accelerate toward sustainable success.