What Financial Metrics Do Investors Check Before Funding?

Have you ever wondered what actually goes through an investor's mind when they're looking at your startup's numbers? I've been through this process more times than I care to count—both from the founder's side pitching apps we've built, and from the development side helping startups prepare for funding rounds. And here's what I've learned: investors aren't just looking at whether your app is good or not, they're trying to figure out if the business behind it makes sense. Its one of those things that catches founders off guard, because they think having a great product is enough. It isn't.

When we build apps for startups preparing for Series A or seed rounds, the conversation always shifts from features and design to something more uncomfortable—the financial metrics that prove your app isn't just popular, its profitable (or at least has a clear path to profitability). I mean, you can have 100,000 downloads and still get rejected by investors if your numbers don't tell the right story. I've seen it happen with a fintech app we built that had brilliant user engagement but terrible unit economics; the investors passed within 20 minutes of seeing the pitch deck.

Investors fund businesses, not just apps—and the difference between those two things is entirely in the metrics you can demonstrate.

The metrics investors care about have evolved quite a bit over the years. Sure, revenue matters, but they want to see the whole picture—how much it costs you to acquire each customer, how long they stick around, how quickly you're burning through cash, and whether the business model actually scales. We're going to walk through each of these financial metrics in detail, because understanding them isn't just about getting funded; its about building a sustainable app business that doesn't collapse six months after launch. And trust me, that happens more often than you'd think.

Monthly Recurring Revenue and Growth Rate

When investors look at your mobile app, they want to see one thing above everything else—predictable revenue that's growing month after month. I've sat in enough pitch meetings to know that MRR is the first metric that gets pulled up on screen, and its bloody important. If you've got a healthcare app charging £9.99 a month for premium features and you've got 500 subscribers, thats £4,995 in MRR. Simple maths. But here's what really matters to investors; they want to see that number going up consistently, not bouncing around like a lottery ticket.

Growth rate is where things get interesting. Most investors I work with are looking for at least 15-20% month-on-month growth in the early stages—anything less and they start asking difficult questions about product-market fit. I remember working on a fintech app where we had decent MRR but growth had flatlined at around 8% for three months straight. The founder couldn't understand why investors kept passing. The issue wasn't the revenue itself; it was that the trajectory suggested we'd hit a ceiling. We had to completely rethink our acquisition strategy before the next funding round.

Heres how investors typically calculate your monthly growth rate and what they're looking for:

• Take your MRR from this month minus last months MRR
• Divide that number by last months MRR
• Multiply by 100 to get your percentage growth
• Track this over at least 6 months to show consistency (not just a one-off spike)
• Be ready to explain any dips or unusual jumps with actual data

One mistake I see constantly is founders including one-off payments in their MRR calculations. Don't do it. Investors will spot this immediately and it destroys trust. If someone pays £120 upfront for a year, thats £10 MRR, not £120. You also need to factor in downgrades—if users are moving from your £15 plan to your £5 plan, that affects your net MRR growth and investors will dig into why that's happening. This is where understanding how different revenue models affect your app's fundability becomes crucial for long-term success.

Customer Acquisition Cost vs Lifetime Value

Right, this is where most app founders get their numbers completely wrong and honestly, its painful to watch. I've built apps that cost £50,000 to develop but the founders had spent maybe an hour thinking about how much it would cost to actually get users. That's backwards. Your Customer Acquisition Cost (CAC) is how much you spend in total—ads, marketing, salaries, everything—to get one paying customer. Your Lifetime Value (LTV) is how much revenue that customer generates before they leave. Simple enough?

Here's what investors want to see: your LTV should be at least 3 times your CAC. So if it costs you £10 to acquire a user, they need to generate £30 in revenue over their lifetime. When I worked on a fitness subscription app, we spent months getting this ratio right; initially our CAC was £22 and LTV was only £35, which meant we were barely making any profit per user. After improving onboarding and reducing early churn, we got LTV up to £78 and suddenly the business model made sense to investors.

Calculating These Metrics Properly

Most people mess up the calculation by not including all their costs. Your CAC isn't just your Facebook ads spend—it includes your marketing team salaries, agency fees, referral bonuses, app store optimisation work, content creation costs... everything. And your LTV calculation needs to account for how long users actually stick around (that's where churn rate comes in, which we'll cover later). I mean, you can't just assume every user stays forever, can you?

For a healthcare app I developed, we tracked every penny spent on acquisition over six months and divided it by new paying users. Our CAC was £45, but because we had a subscription model with strong retention, our LTV reached £220. That 4.9x ratio got investors interested immediately because they could see a clear path to profitability as we scaled.

Track your CAC by channel separately—Instagram ads, Google, content marketing, etc. You'll often find one channel has a CAC of £5 while another is £50 for the same quality user. Focus your budget on what actually works, not what feels right. This is essential for stopping wasted spend on poor-quality app installs that never convert.

Why This Ratio Matters More Than Downloads

I've seen apps with millions of downloads fail because their CAC was higher than their LTV. You're literally paying more to acquire customers than they'll ever give back. That's not a business, that's just burning money. Investors look at this metric because it tells them if your app can grow sustainably or if you'll need constant funding injections just to keep the lights on.

One more thing—if your LTV:CAC ratio is too high (like 10:1 or more), investors might actually question whether you're spending enough on growth. Sounds mad, but if you've found a formula that works that well, you should be pouring more money into acquisition to capture market share before competitors catch up. Its about finding that sweet spot where you're growing fast but sustainably.

Burn Rate and Cash Runway

I've watched more than a few promising startups run out of money just as their app was gaining traction, and its always tough to see. Burn rate is simply how much cash you're spending each month—salaries, server costs, marketing spend, office space if you have it. Cash runway is how many months you can survive before hitting zero. The maths dead simple: take your current cash balance, divide it by your monthly burn rate, and you've got your runway. If you've got £300,000 in the bank and you're burning £50,000 per month, you have six months left.

Investors want to see at least 12-18 months of runway after their investment because mobile apps take time to find product-market fit. I've built apps that took 6-7 months just to get the user experience right, and that was with an experienced team. One fintech app we developed needed three major pivots before users actually engaged with it consistently—imagine if we'd only had six months of cash? The app would've died before we figured out what worked. This is where understanding how to measure progress during development becomes crucial for managing expectations and burn rates effectively.

What Investors Actually Look For

Here's what makes investors nervous: a rapidly increasing burn rate without corresponding revenue growth. If your burn rate is climbing 20% month-over-month but your revenue is flat, you're heading for trouble. They want to see that you understand your unit economics and have a plan to reach profitability (or at least break-even) before the money runs out. I've had clients who thought raising more money was the solution to everything, but investors can spot that mentality a mile away. They back founders who treat capital like its precious because it is.

Managing Your Burn Sensibly

The apps that survive aren't always the ones with the most funding—they're the ones that spend wisely. When we work with startups on tight budgets, I always recommend prioritising spending on things that directly impact user acquisition or retention. Can you outsource your customer support initially instead of hiring full-time staff? Can you use managed services for your backend instead of building everything from scratch? These decisions buy you time to figure out whats actually working in your app. Time is your most valuable asset when you're building something new, and cash runway is just another way of measuring how much time you have left to get it right.

Gross Margins and Unit Economics

When investors look at your app, they're asking a simple question: does each transaction actually make money? I mean proper money, not just revenue. Because here's the thing—I've seen apps with millions of users that were bleeding cash on every single transaction. One e-commerce client we worked with was doing £500k in monthly revenue but their unit economics were broken; they were spending £15 to fulfil orders that customers paid £12 for. Sounds mad, right? But it happens more often than you'd think.

Gross margin is basically what you keep after paying the direct costs of delivering your service. For mobile apps this includes things like server costs, payment processing fees, content delivery, API calls, customer support for that user... all the stuff that scales with your user base. A good SaaS app should be hitting 70-80% gross margins—anything below 60% and investors start getting twitchy. Physical product apps? You'll be lucky to see 40% and that's actually fine, its just a different business model. For apps with complex features like loan calculator integration, you need to factor in the ongoing API costs and computational requirements.

Unit economics tell you if your business model actually works before you scale it into an expensive disaster

I worked on a healthcare app where we were paying £0.08 per video consultation in infrastructure costs. Sounds tiny yeah? But when you're doing 100k consultations monthly that's £8k just in hosting. Add payment fees, SMS notifications, data storage, support tickets... suddenly each £5 consultation was costing us £2.20 to deliver. The margins worked, but only because we'd mapped every single cost. Most founders forget to include things like fraud prevention, failed payment retry costs, or the customer service hours spent dealing with confused users. Track everything. Because investors will.

Churn Rate and User Retention

I've watched too many promising apps die because the founders obsessed over downloads but ignored retention. Churn rate—the percentage of users who stop using your app over a given period—is one of those metrics that investors care about deeply, and honestly, its often more telling than your growth numbers. A high churn rate basically means you're pouring water into a leaky bucket; you can keep adding users but if they're leaving just as fast, you're not building anything sustainable. Most investors want to see monthly churn below 5% for consumer apps, though this varies wildly by category. Gaming apps? Churn can be brutal, sometimes hitting 80% within the first month. Financial apps typically see much better retention because switching banks or investment platforms is a proper hassle.

When we built a health tracking app a few years back, the initial churn was around 15% monthly—way too high. We dug into the data and found that users who didn't complete the onboarding process were 3x more likely to churn within a week. We redesigned the entire experience, broke it into smaller steps, and added progress indicators. Simple stuff really, but it dropped our churn to 7%. The key insight? Users who experienced the core value proposition within their first session had retention rates that were night and day compared to those who didn't. Understanding how progress bars manipulate user behaviour during setup can significantly improve these onboarding completion rates.

What Investors Actually Look For

Here's what I show investors when discussing retention:

• Day 1, Day 7, and Day 30 retention rates—these tell the story of whether users find value
• Cohort analysis showing how retention improves (or worsens) over time
• What you're actively doing to reduce churn, not just what the numbers are
• The relationship between your retention curve and unit economics

Something I've learned is that good retention doesn't happen by accident. It requires constant attention to user feedback, regular feature updates, and—this is the bit people miss—proper communication with your users. Push notifications get a bad reputation, but when done right they're a retention lifeline. One e-commerce app we worked on saw a 23% improvement in 30-day retention just by sending personalised reminders about abandoned carts and items back in stock. The trick is making users feel like you understand what they need before they forget your app exists.

User Engagement and Activity Metrics

When investors look at engagement metrics they aren't just checking if people downloaded your app—they want to know if users actually stick around and use it. I've seen apps with hundreds of thousands of downloads get rejected for funding because their daily active users were basically non-existent. Its brutal but it makes sense; if people download your app and never open it again, that's a pretty clear signal something's wrong with the product.

The most common engagement metrics investors care about are daily active users (DAU), monthly active users (MAU), and the ratio between them. A healthy DAU/MAU ratio sits around 20-25% for most consumer apps, though social platforms can push 50% or higher. I worked on a fitness app once where we thought our 100,000 downloads were impressive until an investor pointed out our DAU was only 3,000—turns out people were downloading it with good intentions but never actually starting their workout plans. That's a 3% DAU/MAU ratio, which is terrible.

Session length and frequency matter too. A meditation app with 2-minute sessions three times daily shows strong habit formation; a food delivery app with weekly usage but high order values can still work. Context matters here—you need to understand what "good" looks like for your specific category. Finance apps might see lower frequency but longer sessions when users check in, whereas gaming apps need multiple short sessions per day to demonstrate stickiness. For specialized sectors like restaurant and food service apps, engagement patterns can be quite different from consumer apps.

Track your week 1, week 4, and week 8 retention rates separately. Investors know that if you can get users past 8 weeks of regular usage, you've likely created a genuine habit and that's when your app becomes really valuable. I've seen funding decisions hinge entirely on whether an app could prove sustained engagement beyond the initial novelty period.

Push notification engagement rates tell investors if you've built a genuine communication channel with users or if people have tuned you out. Aim for 10-15% click-through rates on your notifications, though this varies wildly by category. The e-commerce apps I've built typically see 8-12%, while our healthcare reminder apps hit 25-30% because the notifications serve a genuine functional purpose rather than just trying to drive engagement. For social features, implementing strategies to encourage friend tagging in app posts can significantly boost organic engagement and user acquisition.

Revenue Per User and Monetisation Efficiency

Investors want to know if your app can actually make money from the people using it, and that's where Revenue Per User comes in. I've built apps with subscription models, in-app purchases, advertising revenue, and transaction fees—each one monetises differently and investors understand that. What they're looking for is proof that your monetisation model fits your user base and that you're getting better at extracting value over time. A healthcare app I worked on started with a £4.99 monthly subscription, but after analysing user behaviour we introduced a freemium tier and annual plans. Revenue per user actually increased by 40% because we gave people more ways to pay that matched their commitment level. Its not about charging more, its about charging smarter.

The metric investors really care about is Average Revenue Per User (ARPU) and how it trends month over month. If your ARPU is flat or declining, that's a red flag—it suggests you've maxed out what users are willing to pay or your monetisation strategy isn't working. I've seen fintech apps with ARPU of £15-20 per month do really well with investors, whilst social apps relying on ads might only generate £0.50-2 per user monthly. Neither is wrong, but investors need to see that your unit economics work at scale. One e-commerce app we built had terrible ARPU initially because transaction values were low, but once we introduced personalised product recommendations and a loyalty programme, average transaction values jumped 65% and suddenly the numbers looked very different.

Key Monetisation Metrics Investors Examine

• ARPU (Average Revenue Per User) tracked monthly and annually
• Paying user conversion rate (what percentage of users actually pay)
• Revenue growth rate compared to user growth (are you monetising better over time?)
• Monetisation model diversity (multiple revenue streams reduce risk)
• Price elasticity testing results (have you experimented with pricing?)

What really impresses investors is when you can show you understand your monetisation deeply and you're actively experimenting. A subscription app with 5% paying conversion might sound rubbish, but if three months ago it was 2% and you've implemented targeted onboarding improvements, that trajectory tells a compelling story. I always tell clients to track not just ARPU but also ARPPU (Average Revenue Per Paying User) because it separates how well you convert free users from how much your paying users actually spend—two very different problems requiring different solutions.

Market Size and Growth Potential

Here's something that catches most founders off guard—investors spend more time sizing up your market than they do scrutinising your actual product. I mean, you can have the most beautifully designed app with perfect unit economics, but if you're fighting for scraps in a tiny market, you're going to struggle to get funding. And I've seen this happen more times than I'd like to admit.

When we worked on a healthcare app for medication adherence, the investors wanted to see three specific numbers: total addressable market (TAM), serviceable addressable market (SAM), and serviceable obtainable market (SOM). Basically, they wanted to know how big the entire opportunity was, how much of that we could realistically target with our solution, and what portion we could actually capture in the next years. The difference between these numbers tells investors whether you understand your market or if you're just throwing around big figures to impress them.

The market size conversation isn't about proving there's a billion-pound opportunity—its about demonstrating you understand exactly where your slice of that pie comes from and how you'll grab it before someone else does.

But here's what investors really care about: growth rate. A £10 million market growing at 50% annually is often more attractive than a £100 million market growing at 5%. I've watched investors pass on seemingly larger opportunities because the growth trajectory just wasn't there. They want to know if you're riding a wave or swimming against the tide; and for mobile apps specifically, they'll look at category growth trends in the app stores, competitor funding rounds, and whether regulatory changes might expand or contract your addressable market. The fintech apps we've built have benefited massively from Open Banking regulations expanding what's possible—that's the kind of market expansion story investors want to hear. This is also where planning for long-term relevance becomes crucial, as keeping your app relevant in a growing market requires ongoing strategic thinking.

Conclusion

After building apps for startups seeking funding for years now, I can tell you that investors aren't just looking at one magic number—they want to see how all these metrics fit together to tell a story about your business. Its like pieces of a puzzle really; each metric on its own might look okay, but investors need to see the complete picture before they'll commit their money.

The truth is, most founders I work with obsess over their user numbers and downloads, but investors care more about whether you actually understand your unit economics. Can you acquire customers profitably? Do people stick around long enough to justify what you spent getting them? Are your margins healthy enough to scale without burning through cash too quickly? These are the questions that determine whether an investor sees you as a good bet or a risky gamble. When it comes time for investment negotiations, understanding how to value your app properly will help you present these metrics in the strongest possible light.

Look, I've seen apps with millions of users get passed over for funding because their retention was terrible, and I've seen smaller apps with just a few thousand engaged users secure serious investment rounds because their numbers proved they'd figured out something that worked. The difference wasn't the size—it was the quality of their metrics and the founders ability to explain what those numbers meant for the future.

But here's what nobody tells you; investors expect you to know these metrics backwards and forwards. They'll ask you about your CAC payback period in the middle of a pitch, or question why your churn spiked last quarter. If you cant answer confidently with real data, you lose credibility fast. So before you start pitching, make sure you actually understand these numbers and what they mean for your business...not just what they are, but why they matter and how you're going to improve them moving forward.