Venture and private equity calculators
SaaS & growth
Recurring revenue and efficiency metrics.
SaaS growth (MRR & ARR)
What it measures
Calculates annual recurring revenue (ARR) from monthly recurring revenue (MRR) and projects it forward with compounding monthly growth.
When to use it
Standard reporting for any subscription business.
Watch out for
Month-over-month growth compounds quickly: 5% a month is about 80% a year. Small drops in monthly growth sharply reduce the year-end result.
SaaS growth (MRR & ARR)
Annualize revenue and project growth.
LTV:CAC unit economics
What it measures
A core measure of unit economics. Compares the gross profit a customer brings over their lifetime (LTV) with the cost of acquiring them (CAC).
When to use it
Use it to judge whether a startup can grow profitably. Paying $100 to acquire a customer who brings $300 of gross profit is a strong position.
Watch out for
Churn has the largest effect on LTV. High ARPU is worth little if customers leave within a few months.
LTV:CAC unit economics
Customer lifetime value compared with acquisition cost.
Healthy: meets the usual benchmark.Target: 3:1
CAC payback period
What it measures
Calculates how many months it takes to earn back the money spent acquiring a customer. It measures the cash-flow efficiency of growth.
When to use it
Important for cash planning. Even with a high LTV, an 18-month payback means spending a lot of cash while you wait for the profit to arrive.
Watch out for
A fast payback (under 12 months) lets you reinvest profits sooner and grow faster.
CAC payback period
Time to recover the cost of acquiring a customer.
Slower than typical: growth needs more cash.12–18 months
Rule of 40
What it measures
A rule of thumb for software companies: revenue growth rate plus profit margin should add up to at least 40%.
When to use it
Valuing late-stage SaaS companies. It balances growth against profitability: fast growth with heavy losses can pass, as can slow growth with high profits. Slow growth with losses does not.
Watch out for
Usually applied to annual revenue growth and EBITDA margin.
Rule of 40
Balance between growth and profitability.
Healthy and attractive to investors.Target: 40 or more
SaaS magic number
What it measures
Measures sales efficiency: how much annual recurring revenue (ARR) you add for every $1 spent on sales and marketing.
When to use it
Setting budgets. A magic number above 1 suggests you can spend more, because new revenue repays the cost within the first year.
Watch out for
Timing lags can distort the figure. Marketing spend today may not produce leads for 3 months.
SaaS magic number
Sales and marketing efficiency.
Typical efficiency.0.75–1.0
Funding & equity
Valuation, dilution, and fundraising.
Exit waterfall
What it measures
Shows how the proceeds of an acquisition are paid out: who is paid first (liquidation preferences) and how much is left for common shareholders (founders and employees).
When to use it
Use it when negotiating a term sheet. Participating preferred stock sounds like a technicality but can cost founders millions in a successful exit.
Watch out for
Watch the indifference point. When investors convert to common, they give up their downside protection in exchange for a larger share of the upside.
Exit waterfall
Liquidation preferences versus common stock.
Pre-money vs post-money
What it measures
The basic equation of venture capital. Pre-money is what the company is worth before the new cash arrives. Post-money is pre-money plus the investment.
When to use it
Every funding round. Founders often confuse the two. Raising $1M at a $4M valuation usually means $4M pre-money ($5M post-money), which implies 20% dilution.
Watch out for
Option pools. Investors often require the employee option pool to be created from the pre-money valuation, which dilutes only the founders, not the new investors.
Pre-money vs post-money
Startup valuation and ownership split.
Dilution
What it measures
Calculates how much your slice of the pie shrinks when you sell a new slice to investors.
When to use it
Use it when planning a fundraise, for example: if I raise $2M at $8M pre-money, what happens to my 40% stake?
Watch out for
Dilution is not always bad. Owning 10% of a $1B company is worth more than owning 100% of a company worth nothing.
Dilution
Your ownership after a funding round.
Option pool shuffle
What it measures
The option pool shuffle is a negotiation tactic. Investors often require the employee option pool (10–20%) to be created from the pre-money valuation, so existing shareholders (the founders) pay for the pool, not the new investors.
When to use it
Negotiating a term sheet. If the investor offers '$10M pre-money, including a 10% pool', your company is effectively valued at about $9M.
Watch out for
Always ask whether the option pool sits in the pre-money or the post-money valuation. Pre-money puts the whole cost on existing shareholders; post-money shares it with the new investors.
Option pool shuffle
The hidden cost of an employee option pool.
Convertible note / SAFE
What it measures
Shows how a convertible note or SAFE converts into equity at the next priced round. Investors get whichever is better for them: the valuation cap or the discount.
When to use it
Raising a seed round on SAFEs. It shows how much dilution you will actually take when the Series A closes.
Watch out for
If your Series A valuation is far above the cap, early investors convert at a very low price and receive a large stake, which dilutes founders heavily.
Convertible note / SAFE
Conversion at the valuation cap or the discount.
Burn rate & runway
What it measures
Runway is how long a company can operate before it runs out of cash. Burn rate is the net cash it loses each month.
When to use it
The most important metric for an early-stage startup. A company that runs out of cash cannot keep operating.
Watch out for
Burn rate is rarely constant and usually rises as you hire. This calculator assumes a constant burn, so the result is likely optimistic.
Burn rate & runway
How long your cash will last.
Enough time to raise, but start preparing.12–18 months
TAM / SAM / SOM
What it measures
A market sizing framework. TAM (total addressable market) is the whole market. SAM (serviceable available market) is the part you can actually reach. SOM (serviceable obtainable market) is the part you can realistically capture.
When to use it
Pitch decks. Investors discount a large TAM if the SOM is not realistic.
Watch out for
Bottom-up sizing (number of customers multiplied by price) is more convincing than top-down sizing ('we only need 1% of a $1T market').
TAM / SAM / SOM
Estimate market size from the top down.
Private equity
Buyouts and returns analysis.
Napkin LBO
What it measures
A simple leveraged buyout (LBO) model. Private equity firms buy companies largely with debt, use the company's own cash flow to repay that debt, and sell the company later.
When to use it
Screening a buyout target quickly: can the cash flow support the debt, and do the returns work?
Watch out for
This is a paper LBO. It assumes flat EBITDA (unless you raise the exit multiple) and ignores interest costs, so it only roughly captures the deleveraging part of returns.
Napkin LBO
Estimate private equity returns.
PE value creation bridge
What it measures
A value creation bridge splits LBO returns into three sources: EBITDA growth (operational improvement), multiple expansion (market timing or a better sale), and deleveraging (using cash to repay debt).
When to use it
Reporting to limited partners (LPs), who want to know whether value came from building a better business (growth) or from favorable market prices (multiple).
Watch out for
Multiple expansion is seen as a lower-quality return because it is hard to repeat. Operational growth is seen as higher quality.
PE value creation bridge
Where the equity gain came from.
Buy and build
What it measures
Models a buy-and-build strategy. Buying smaller companies (add-ons) at lower multiples and folding them into a larger platform lowers the average price paid and creates value immediately.
When to use it
Evaluating an M&A roll-up strategy.
Watch out for
Integration is hard. If the companies are not properly integrated, the synergies do not materialize and you are left with a loose collection of small businesses.
Buy and build
Multiple arbitrage through acquisitions.