Growth Expectations

Traction is the single most important factor in determining whether, how quickly, and on what terms companies can fundraise. OCV companies have roughly 9-12 months to show meaningful traction. If a company struggles to gain traction, we may wind it down.

Growth is generally shown through usage and revenue metrics. Investors want to see an obvious demand for a commercial product. For an enterprise company, meaningful growth could be a handful of logos at a few hundred thousand in annual recurring revenue (ARR).

Weekly growth goals

Early-stage startups operate on a weekly cadence: weekly growth goals and product deliverables. That’s why OCV meets with Pre-Seed companies weekly.

Pre-seed company KPIs should be either usage or revenue growth. 10% week-over-week (WoW) growth is the bare minimum at this stage. If you’re below 5%, you should be making changes and placing bets that will get you above 10% by the following week.

Growth goals are binary, measurable, and ambitious. Production-based goals (“Release this feature” or “Write this blog post”) are important inputs that help you achieve your goals, but are not goals themselves.

Growth metrics

Most companies track weekly active users (WAUs) for their first metric.

WAUs are the number of unique visitors who meaningfully interacted (logged in, used a specific feature, ran # of tests, etc.) with your product each week. Companies will have different "meaningful interaction" criteria depending on their business.

Revenue becomes the primary metric once you have a first paying user.

Measuring growth

Growth is measured by growth rate: the ratio of new customers (the customers at the end of a period less the existing customers at the beginning of a period) to existing ones.

Growth Rate = [(Present Value - Initial Value) / Initial Value] x 100

You need a high growth rate from a reasonable baseline (example).

Later-stage benchmarks

As companies progress to later stages, there are a few other well-known benchmarks you may hear about:

Triple Triple Double Double (T2D3): This is a growth benchmark for early-stage companies to go from $1-2M in ARR (typically Series A stage) to $100M+ ARR in 5-6 years. So if you start at $2M ARR, you'd go: $2M → $6M → $18M → $36M → $72M → $144M

The Rule of 40: This is an efficiency benchmark that's more relevant once you're at scale (typically $50M+ ARR, though people debate the threshold). It says your growth rate + profit margin should exceed 40%. For example: 30% growth + 15% margin = 45%, good.

Burn multiple: This is an efficiency benchmark that tells you how many dollars you're burning to generate each dollar of new ARR. Lower is better, but the expectations are different at each stage of the company. Read David Sacks' substack article if you want to know more.