Metrics That Matter – Three Analyses for Startups and Scaleups to Track on the Path to Profitability | by Paris Heymann | Index Ventures

Section
Business Health
Description
The rallying cry among the tech community in 2022 has been a shift from growth at any cost, to an increased emphasis on profitability. Our belief is that in turbulent times, startups and scaleups alike need to ensure:That they have balance sheets which provide sufficient runway to ride out a downturn without being fully reliant on large amounts of external fundingThat they are developing fundamentally healthy businesses with attractive underlying unit economics and a cost structure built for efficient growthWhile every company is unique and it’s difficult to create a blueprint for must-track metrics across stages and business models (one should analyze a seed stage SaaS company differently than a growth stage gaming company, for example), we’ve found three metrics which provide helpful Green / Yellow / Red diagnostics for startups and scaleups alike amidst a deluge of potential metrics to track: