Published on: 06/16/2025
By Pearl Agarwal
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Every early-stage founder hears the same three metrics from investors: CAC, LTV, and churn rate. But when you are at the pre-seed funding stage, do these numbers really mean what people think they do? The short answer is no. The long answer is: these metrics are critical, but only if interpreted correctly within the chaos of early-stage execution.
For early stage startups, the problem isn’t that they ignore metrics. It is that they treat mature-company metrics like gospel at a stage where everything is fluid. This is especially true when raising from a venture capitalist in India or a venture capitalist in Bangalore, where scrutiny around unit economics for early-stage startups is increasingly sharp.
This guide walks through what CAC, LTV, and churn rate actually signal at the pre-seed stage; how to calculate and interpret them without fooling yourself; and what venture capital investors in India are actually looking for when they ask for these numbers.
One of the biggest traps in early fundraising is presenting metrics like customer acquisition cost and customer lifetime value as fixed numbers. At pre-seed, these numbers are volatile at best and imaginary at worst.
Still, that doesn’t mean you ignore them. It means you treat them as directional.
If you’re an early-stage founder, your CAC and LTV are guesses; educated guesses maybe, but guesses nonetheless. And that’s perfectly normal.
Venture capital investors in India understand that. What they care about is not whether your CAC is Rs. 1,500 or Rs. 1,800. They care whether you understand what drives it and how it might change as you scale. According to industry data, many early-stage startups see CACs range from Rs. 1,000 to Rs. 3,000 in their initial go-to-market experiments, largely dependent on channel mix and sales effort.
CAC or customer acquisition cost is the amount you spend to acquire a new customer. It includes marketing spend, sales effort, and onboarding costs. At pre-seed, this number is inherently inflated because you are doing everything manually.
Most early-stage startups are hustling for every customer. The founder is the salesperson; the campaigns are experimental; the funnel is leaky.
So your CAC is going to look high. That’s not a red flag. It’s a reality. Data from SaaS benchmarks shows early-stage CAC recovery can take 12 to 18 months, though expectations vary by business model.
Related: Top 10 SaaS Metrics Every Founder Should Track for Success
What venture capital investors in India want is not a perfect CAC number but a compelling understanding of how your CAC works. They expect you to be clear about the acquisition funnel, what each step costs, and how those costs will evolve with better execution. If you can articulate where efficiencies will come from,be it product-led growth, organic traction, or improved targeting; it’s that’s what wins trust.
You are not being judged on Rs. 1,000 versus Rs. 1,200 CAC. You are being judged on whether you grasp what those numbers mean. A high CAC is not fatal if there is a believable path to reducing it. What venture capitalists in Bangalore want to see is structured thinking, not premature perfection.
Even if your CAC is inflated today, if you have clarity on how it drops over time, you’ve done more than most founders. The CAC discussion at pre-seed is about direction, levers, and logic. Not about hard benchmarks. It’s a story about evolution, and telling that story well is what resonates with investors.
When early-stage founders are asked about LTV, or customer lifetime value, the natural instinct is to either over-explain or over-promise. But at pre-seed, most startups haven’t retained customers long enough to even define what ‘lifetime’ means.
That doesn’t make LTV irrelevant, it just changes how you talk about it.
LTV at this stage is less about precision and more about understanding the drivers: retention, expansion, and margins. It’s a lens for thinking, not a forecast. When investors, especially a venture capitalist in India; they all ask about LTV, they’re not quizzing your math skills and they’re probing your mental model for how the business could scale. What matters is whether you’ve thought through the assumptions that underpin your numbers, even if those numbers are temporary or soft. Unit economics for early-stage startups don’t need to be airtight; they need to be directionally correct and strategically sound.
Industry heuristics suggest a healthy LTV to CAC ratio of 3:1, but for pre-seed teams with short sales cycles and monthly subscriptions, even 1.5:1 might be acceptable early on.
LTV, or customer lifetime value, is supposed to tell you how much revenue you earn from a customer over their relationship with your company. But at pre-seed, lifetime is a fantasy. You don’t have a life cycle; you have a pilot cohort. So why even talk about LTV? Because it forces you to think through retention, expansion, and margins.
Retention asks whether the customer will return. Expansion evaluates the potential to upsell or cross-sell. Margins examine whether the revenue from each user is enough to support sustainable growth. While the calculation may be fuzzy, the exercise itself is useful. A high customer lifetime value built on unrealistic assumptions is more dangerous than a modest one based on actual observed behavior.
At the pre-seed stage, venture capitalists in India are not seeking precise LTV calculations but want to see if a founder can logically reason through what drives customer lifetime value.
They expect a grasp of retention mechanics, pathways for expansion, and how margins scale; not flashy projections but clear thinking.
When a venture capitalist in Bangalore hears a well-explained approach that acknowledges uncertainty yet offers a thoughtful framework to improve LTV as the product evolves, it signals maturity. Founders who anchor their LTV thinking in early user behavior, and who link it clearly to monetization strategy and product roadmap, are speaking the language investors actually trust.
Ultimately, unit economics for early-stage startups matter less for their accuracy and more for what they reveal about a founder’s ability to adapt, think critically, and connect data with decisions.
Churn rate can be difficult to evaluate at pre-seed funding because sample sizes are small and engagement is inconsistent. However, even directional churn matters.
If early users drop off quickly, that’s a signal of weak product-market fit.
Low churn, on the other hand, even with few users, can be a compelling early signal.
Founders need to track churn and segment it. Who’s leaving and why? What does churn tell you about the product experience? A clear explanation of how churn is being addressed shows learning velocity, which venture capital investors in India value more than polished retention dashboards.
According to SaaS data, median churn rates in early-stage B2B companies can exceed 10% monthly. Anything below 5% is often seen as strong retention early on.
More than anything, venture capitalists in Bangalore are looking for signs of strategic thinking. They want to know that a founder understands how CAC, LTV, and churn connect; that the founder can articulate what levers will shift these numbers; and that the story of progress is grounded in logic, not wishful thinking.
Whether it’s through a realistic approach to unit economics or well-documented learning from early user cohorts, clarity of thought is what signals founder-market fit at the pre-seed stage.
For early stage startups, CAC, LTV, and churn rate are not about precision, but about principles. These metrics help clarify the business model, inform product iterations, and signal founder clarity.
At the pre-seed funding stage, what a venture capitalist in India or a venture capitalist in Bangalore wants to see isn’t a spreadsheet full of perfect numbers; it’s a founder who uses metrics to build sharper hypotheses.
For venture capital investors in India, what matters is whether you understand what drives cost and retention, how that will change over time, and whether your vision for improvement makes strategic sense.
Getting the metrics directionally right, knowing their limitations, and using them to frame learning loops is far more valuable than pretending they are precise. When you’re at pre-seed, logic beats accuracy every time.
There is no universal good CAC. What matters is your understanding of what drives it and how it might decline with scale or efficiency.
Add up all sales and marketing costs over a given time period and divide by the number of new customers acquired in that same period. Be honest about what counts as cost.
LTV should include gross revenue per user across their life cycle minus direct costs. Be conservative. Overinflated LTVs are common and unhelpful.
High churn signals weak product-market fit. Investors see it as a red flag. Low churn, even at low scale, is a positive signal.
They look for founder clarity, realistic modeling, and understanding of core unit economics for early-stage startups. Precision matters less than logic and learning velocity.
