Unit economics is the per-customer profit profile of a business, expressed most commonly as customer lifetime value (LTV) versus customer acquisition cost (CAC). It's used to determine whether a business can profitably acquire customers at scale. It answers the deciding question of any growth-stage startup: does this company make money on each customer, and if it doesn't yet, will it.
The core ratio is LTV divided by CAC. The widely cited benchmark, popularized by David Skok and others in SaaS investing circles, is that LTV:CAC should be at least 3x for a healthy growth-stage business. A 1x ratio means the company recovers acquisition cost but creates no margin. A 2x ratio is marginal. A 3x ratio means each customer creates t...
A Qualified Purchaser (QP) is a higher-tier SEC investor classification defined under the Investment Company Act of 1940. It requires substantially more wealth than accredited investor status (typically $5 million+ in investments for individuals, $25 million+ for entities), and is used as the eligibility threshold for participation in private investment funds structured under Section 3(c)(7). The structure allows funds to have more LPs than the 100-investor limit of Section 3(c)(1) funds. It is the higher wealth gate that distinguishes participation in larger private investment funds from participation in smaller venture funds.
The thresholds:
Fiduciary duty is the legal obligation that directors and officers owe to a corporation and its shareholders to act with care, loyalty, and good faith. The foundation of corporate governance, it is the basis on which directors and officers can be personally sued for breach of duty. Under Delaware corporate law, the two primary duties are the duty of care (informed decision-making) and the duty of loyalty (acting in the corporation's best interest, not personal interest). It is one of the most-important and least-understood concepts in startup governance, and the legal doctrine that determines how board members behave when shareholder and company interests conflict.
The two primary fiduciary duties under Delaware corporate law...
A liquidation preference is the preferred-stock right to get paid back before common shareholders in a liquidity event such as a sale, merger, or wind-down. It defines who gets what, in what order, when the company is sold or shut down.
The market standard in a healthy venture deal is a 1x non-participating preference: each investor gets back the greater of their original investment or their pro-rata share of the proceeds as if their preferred had converted to common, but not both. Variations get more aggressive. A participating preference lets the investor take their money back first and then also share in the remaining proceeds with common, often called "double dipping." A multiple preference (2x, 3x) returns that m...
A pricing model is the structural mechanism by which a company charges customers, distinct from pricing strategy and revenue model. It encompasses the unit of pricing (per-seat, per-API-call, per-transaction, per-product, flat-platform), the structure of tiers and packages, and the relationship between value delivered and value captured. The main modern options are per-seat (classic SaaS), usage-based (infrastructure SaaS), tiered (good/better/best), flat (single price), per-outcome (rare but value-aligned), and hybrid combinations. Pricing model choice has significant implications for unit economics, sales motion, and customer behavior.
The main pricing models:
Per-seat / per-user:
A definitive agreement is the binding contract that consummates an acquisition, typically negotiated over 6 to 12 weeks after the LOI is signed. It is also called a definitive purchase agreement, DPA, merger agreement, or stock purchase agreement depending on deal structure. It covers the final negotiated purchase price, the transaction structure, representations and warranties, indemnification provisions, escrow holdbacks, closing conditions, and post-close covenants. It is the document that turns the LOI's non-binding intentions into legally enforceable terms, and the negotiation phase where the headline price quietly moves by 10 to 30 percent in either direction depending on what due diligence reveals.
The major sect...
Scenario planning is the strategic forecasting practice of modeling multiple plausible futures, typically a bull case, base case, and bear case. It varies multiple assumptions together to create coherent alternative scenarios, used to understand the range of possible outcomes, identify decisions that work across scenarios (robust strategies) vs decisions that work only in specific scenarios (fragile strategies), and prepare contingency plans. Distinct from sensitivity analysis (which varies one variable at a time), scenario planning bundles multiple assumption changes into holistic alternative futures.
The standard scenarios:
Bull case (everything works):
Corporate formalities are the procedural and documentation requirements that maintain the legal separation between a corporation or LLC and its owners. The category covers regular board meetings with minutes, annual shareholder meetings, proper resolutions for major decisions, separation of business and personal finances, accurate corporate records, and timely state filings. Failing to maintain them lets courts "pierce the corporate veil" and hold owners personally liable for business debts and obligations. They are the boring administrative work that most founders skip and the lever courts use to invalidate the limited-liability protection that was the whole point of forming the entity.
The major categories of corpora...
The SaaS Magic Number is the sales efficiency metric calculated as quarterly net new annualized recurring revenue divided by quarterly sales and marketing spend. It's often expressed with the previous quarter's S&M spend as the denominator, on the theory that current-quarter S&M produces future-quarter ARR. The metric assesses whether the company is generating revenue efficiently from its growth investment. Values above 1.0 indicate efficient growth (every dollar of S&M produces more than a dollar of net new ARR), values between 0.5-1.0 indicate moderate efficiency, and values below 0.5 indicate problematic efficiency. It is a SaaS-specific metric that complements LTV:CAC and CAC payback.
The calculation:
Basic f...
Lifecycle marketing is the practice of delivering targeted messaging, content, and offers to customers based on where they are in the product relationship. Stages include new, activated, engaged, at-risk, churned, returning, and advocate, typically executed through email, in-product messaging, SMS, push, and increasingly RCS. Stage transitions are triggered by customer behavior rather than calendar dates. It is the operational layer that turns a customer lifecycle model from a slide into actual messages that fire at the right moment.
The canonical stages most lifecycle programs cover: onboarding (the first 7 to 30 days, focused on activation), engagement (steady-state value reinforcement, feature adoption, education), ex...