Growing Your Tech Startup

In my previous articles Building a Tech Startup and Technology-Push Approach to Building a Tech Startup, I explored my journey in building a startup and the essential steps to launch and position a Tech startup. I hope you found them useful and that they helped you in building your next big thing. Once you have established a solid foundation and after proving your Product-Market Fit (PMF), the next challenge is growth.

It took us some time at Linkers Technology to figure things out, and our guiding stars has always been the mentors and fellow founders who walked this path before us and thankfully shared their time and guidance. I am so proud of our committed team, who have dedicated their efforts, time, and resources to help us in many breakthroughs and start seeing Linkers grow on a healthy trajectory.

In this article, we will outline the key growth indicators, different types of expansion strategies, the “recipe” for growth, and how to plan for funding, complete with quantitative benchmarks to guide your way.

1. Quantifying Your Growth Indicators

Before growing, validate that your startup is truly ready to grow. One thing you should keep in mind is to define your industry precisely in order to have a healthy and accurate benchmark, otherwise, you might be misled by the wrong set of metrics and indicators. The following metrics are generic and can help you measure this:

Monthly Recurring Revenue (MRR) Growth

Depending on your business model, if it is a recurring revenue then you have a timely recurring revenue that grows over time. If your model is not recurring but rather one time with an expectation of buying again, you could say you have a semi-recurring revenue. Customer commitment is key in this case though. Committed recurring revenue, is what we are focusing on here.

A 10–20% month over month increase in MRR (common in SaaS) indicates strong market traction and a reliable customer base. Or based on your sales cycle, for us at Linkers, we do it quarterly. Pick your SAAS domain or industry carefully to have the right benchmarks, an enterprise grade solution might have a different growth rate.?

LTV:CAC Ratio

Which is a comparison between how much it costs to acquire a customer (CAC) and how much you earn from them over time (LTV). The logic behind this is to stay focused and maintain a healthy and profitable long term relationship with your customers, it is also a signal of measuring the stickiness of your product, whether you are overspending or less spending on marketing or CAC.

An LTV:CAC ratio of 3:1 (or higher) is generally healthy and attractive to investors but it also depends on the industry. Logically, the higher the ration it means you are not spending much on marketing, and the lower the ration it means you are paying too much to acquire a customer.

There are multiple ways to measure the LTV, the trick is to divide your customers into different logical groups, use the formula that reflects the nature of your business and maintain the same time unit as in your CAC, here are three ways to do so with my understanding of each:

1. The sum of all revenue generated by the customer is divided by their lifetime in the company. Easier in case you have lots of definitive lifetimes, in another word, a high churn rate.
2. The average revenue per customer (ARPU) is divided by the churn rate. Fit for customer groups who have a continuous lifetime and hard to measure if they continue to use the product, in another word, low churn rate.
3. Others might multiply the ARPU by the gross revenue and then divide by the churn rate and high cost so you want to eliminate the noise and have a clear picture of your actual benefit from keeping customers using your product.

Churn Rate

Which is the percentage of customers discontinuing or canceling their subscription within a specific time frame. This is extremely valuable to assess if your product requires after sales service, a customer success or if the product simply did not deliver on customers’ expectations or needs. An acceptable churn rate depends on the business model such as:

• For B2B SaaS products: Shoot for 1–2% monthly churn (or lower).
• For B2C SaaS products: 3–5% can be acceptable, though single digits are preferred.

Cash Burn Rate & Runway

Your burn rate is the amount of money your startup spends (net outflow) in a given month. It’s typically measured in two ways:

• Gross Burn: Total monthly operating expenses (payroll, rent, marketing, and other costs) before accounting for revenue.
• Net Burn: Monthly operating expenses minus any revenue you’re bringing in.

The burn rate indicates how quickly you’re using your capital. If you’re burning $50,000 per month and have $600,000 in the bank, your net burn rate suggests you can operate for 12 months under current conditions which is your runway or leeway.

The runway is how many months your startup can continue operating before you run out of cash assuming no changes in spending or revenue. Therefore, the runway is the cash in hand divided by the average monthly net burn.

Your Goal is to maintain 12–18 months of runway to confidently execute growth initiatives without risking premature cashflow pressure.

2. Types of Growth: Vertical, Horizontal, and Geographical

The path you choose depends on your market, product type, and strategic vision:

Vertical Growth

• What It Involves: Deepening your offering within the same market or supply chain.
• Example: A customer support SaaS adding AI-driven analytics to move “upstream” in the support workflow.
• Advantage: Increases customer loyalty by solving multiple, related problems for the same user base.

Horizontal Growth

• What It Involves: Expanding into adjacent products or services at the same level of the value chain.
• Example: A payments startup adding invoicing or accounting features.
• Advantage: Taps into cross-selling opportunities, broadening your audience without leaving your core domain.

Geographical Expansion

• What It Involves: Entering new regions or markets (nationally or internationally).
• Example: A Middle East tech startup moving into European or North American markets.
• Advantage: Diversifies revenue streams and reduces dependency on one geographic location but requires cultural and regulatory due diligence.

Deciding on your growth strategy requires multiple iterations of planning, comparing historical and forecast numbers, debating different plans with team members and the board but most importantly, the blue ocean that contains more of your customers’ needs. At Linkers we used two tools that helped us realize the product roadmap and the future of growth which are, the value curves, the three circles, and the product horizon.?

3. The “Recipe” for Growth: People, Process, and Product

Sustained growth relies on three critical pillars:

People

• Each stage of the startup has its own people hence, we need to think about "first who then what" which is a concept I learned while listening to the book "Good to Great" by Jim Collins.And most importantly always keep “A” people on the bus. Throughout experimentation I learned, there are logically three types of people, “A” people who are fit for the values, have the skills and are coachable. “B” people who also have the values but lack the skills if they are coachable and can pick up those skills, therefore, can be moved to “A” people otherwise they should leave the bus along with “C” people who lack the values and the skills where people who are not on the same page of your startup's values they will be toxic to the culture.
• Throughout the different stages of Linkers, I learned there are Builders and Fixers and it is very critical to choose which type of people at which stage of the startup. The core difference is, that builders have done the same thing over and over again and developed the experience to build the teams and the systems to deliver a certain function within the startup. At the early stage of the startup, fixer are amazing assets who you have mentored and guided, but that's not enough for growth. The startup needs a rigger system and process run by seasoned leaders who can take the company further into the future.
• Foster an environment and a culture of questioning the norm, continuous learning and fast decision-making, allowing teams to iterate quickly without any concern for making mistakes. Startups culture is an art mixed with different experiences based on different industries, and markets. Always remember to celebrate and celebrate and celebrate, do not overkill!.

Process

• Companies are a set of systems that evolve over time.
• Document best practices to maintain consistency and quality as you scale. Having a playbook is super helpful which is a live document that keeps recording of every protocol like a knowledge base of everything the team should do or how to take care of something.?
• Automate anything that is possible, use cloud services and API integrations with agile methodologies (Scrum, Kanban) to handle increased workloads seamlessly. In my personal opinion, this can be dedicated to a person or a team who can champion this and move fast with it for all functions of your startup, yet a bit risky as this will expose different vulnerabilities and opportunities to cut corners of your systems.
• Give close attention to your internal processes such as customer onboarding, care, or success as these will help you explore more potential revenue from your existing customer base. Simply, use that CAC to have a better ARPU and LTV.
• Establish a clear reporting mechanism and frequency for key KPIs like CAC, LTV, churn, and MRR. Adopting OKRs is helpful to keep everyone’s attention to the north star you are seeking.

Product

• Ensure your existing offering matures enough and solves the primary pain points effectively before jumping into building new features.
• Products are a living thing that grows with the startup. As your ecosystem grows your stakeholder's expectation from your product also grows.
• Continuously collect user feedback to inform product updates and maintain market relevance. A-B testing is a great start to test different features and different possibilities, then you might want to explore more sophisticated tactics.?
• Plan new features or product lines that support your chosen growth strategy (vertical, horizontal, or geographical) and fulfill your product horizon.

4. Three Core KPIs to Monitor?

While there are multiple metrics to track, CAC, LTV, and Churn are top-of-mind for founders and investors alike:

Customer Acquisition Cost (CAC)

• Calculation: (Total Sales & Marketing Spend) / (Number of Customers Acquired)
• Good vs. Bad: A good CAC is a fraction of your annual revenue per user (e.g., spending $300 to acquire a user who pays $1,000/year). A bad CAC is when it is high and overshadows your revenue per customer (RPC) signaling unsustainable growth.

Lifetime Value (LTV)

• Calculation: (Average Revenue per User x Gross Margin) / Churn Rate
• Good vs. Bad: A good LTV when it triples the cost of acquisition, LTV:CAC ≥ 3:1 is a common threshold. A bad LTV when it is low and indicates customers either aren’t paying enough or aren’t staying long.

Churn Rate

• Calculation: (Number of Customers Lost in Period) / (Total Customers at Start of Period)
• Good vs. Bad: A good churn rate si 1–2% monthly churn for B2B; ~3–5% for B2C. A bad rate is anything higher than 5% monthly and generally raises alarms.

5. What Do Investors See as “Good” or “Bad” Metrics?

• CAC is below your average annual revenue per user. Investors want to see a disciplined approach to acquiring customers efficiently.
• LTV that’s at least 3x (or more) your CAC. A robust LTV suggests a solid business model and justifies marketing spend.
• Churn in acceptable industry ranges (1–2% for B2B, single digits for B2C). High churn = “leaky bucket.” Even aggressive customer acquisition won’t grow your revenue if churn is too high.
• Positive Growth Trajectory in MRR/ARR that consistently meets or exceeds 10–20% month over month growth (for early-stage Startups).?

6. Planning Your Growth Fund: How Much to Raise and at What Valuation?

Once you validate that growth is the next step, you need to understand that progress is not for free,? you’ll likely need to seek external funding. Here’s how to approach it:

How Much to Raise

• Secure 12–18 months of capital to confidently execute your expansion plan.
• Factor in salaries for key hires (especially in product, sales, and marketing).
• Budget an extra 10–20% to handle unexpected challenges.

Valuation Considerations

• CAC, LTV, churn, and MRR trajectory strongly influence your valuation.
• Look at similar-stage startups (Seed, Series A, etc.) in your sector for typical valuation ranges.
• A higher valuation reduces founder dilution but must be justifiable based on your metrics and market potential.
• Consider a tiering valuation approach based on early vs late investors and the deployment amount.?

What Investors Expect

• Demonstrate how the capital will expedite growth—expanding to new regions, launching new product lines, or scaling your team.
• Investors want evidence that your metrics are stable (or improving), reducing their risk and speeding up a potential exit or liquidity event.

Final words

Growing a tech startup is more than just accelerating your numbers it's about building a sustainable, value driven business that consistently delights customers and meets investor expectations. By tracking key indicators such as MRR growth, CAC, LTV, and churn, and by cultivating a robust strategy around vertical, horizontal, or geographical expansion, you’ll be well positioned to navigate the complexities of growth.

If you haven’t already, revisit my previous articles Building a Tech Startup and Technology-Push Approach to Building a Tech Startup to ensure your foundational elements are solid. For deeper insights, consider these recommended books:

• "Good to Great" by Jim Collins. Examined more than 1,400 good companies, cherry-picked only 11 great ones, and deep dive into what makes them great and successful.
• “Blitzscaling” by Reid Hoffman and Chris Yeh. Explores rapid-growth strategies and the unique challenges at each stage.
• “Crossing the Chasm” by Geoffrey A. Moore Wikipedia Overview Explains how to move from early adopters to mass markets successfully.

Armed with the right metrics, strategy, and resources, your startup can make the leap from a promising venture to a market defining success. Remember: true growth is about adding enduring value, for both your customers and your investors.