Startup Valuation, Unit Economics (LTV:CAC) & Seed Funding Guide for Founders
Author: Mohd Shuja Pathan & Aman Thakur | Published by: VelloxBiz Editorial Desk | 1 min read
Raising institutional seed or Series A capital requires more than a compelling vision—investors scrutinize unit economics, gross margins, and capital efficiency. This guide explains the core financial metrics every founder must master.
1. Mastering LTV to CAC Ratio
The Lifetime Value (LTV) to Customer Acquisition Cost (CAC) ratio measures the long-term profitability of your customer base. A healthy, scalable business model typically maintains an LTV:CAC ratio of at least 3:1, with a CAC payback period of under 12 months.
2. Gross Margin & Contribution Margin
While software-as-a-service (SaaS) companies target gross margins of 75% to 85%, B2B marketplaces and manufacturing startups often operate on 20% to 40% gross margins. Tracking contribution margin after variable fulfillment and logistics costs ensures sustainable scaling.
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