Unit Economics for Startups: CAC, LTV and the Numbers Investors Ask

Why unit economics decide your fate

Growth funded by unprofitable units is a treadmill. Investors want to see that each customer, over time, makes you money.

The core metrics

  • CAC: fully-loaded cost to acquire one customer
  • LTV: gross profit a customer generates over their lifetime
  • LTV:CAC: aim for 3:1 or better over time
  • Payback period: months to recover CAC — under 12 is healthy for many models
  • Contribution margin: revenue minus variable costs per unit

You don’t need perfect unit economics at seed — you need a credible path to them, with the levers identified.

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