Growth rate is the most watched metric in venture capital. It determines your valuation multiple, your fundraising leverage, and ultimately whether your startup has the trajectory to become a category-defining company. Understanding how to calculate it — and what the right benchmarks are — is non-negotiable for serious founders.
Month-over-Month vs Year-over-Year Growth
Month-over-month (MoM) growth = (Current MRR − Previous MRR) ÷ Previous MRR × 100. This is the most granular signal and the most volatile. A single great month can spike MoM; a single bad month can crater it. Use a 3-month rolling average to filter out noise.
Year-over-year (YoY) growth = (Current ARR − ARR 12 months ago) ÷ ARR 12 months ago × 100. This is what institutional investors focus on. It captures seasonal effects, smooths volatility, and is the standard benchmark for Series A and beyond. A 100% YoY growth rate — doubling ARR annually — is typically the Series A bar for B2B SaaS.
CAGR: The Multi-Year View
Compound Annual Growth Rate (CAGR) = (Ending Value ÷ Beginning Value)^(1/years) − 1. CAGR is the most honest way to compare growth across companies at different stages because it accounts for compounding.
A company that grew from ₹10 lakh to ₹1.6 crore ARR in 3 years has a 150% CAGR — which sounds extreme but is actually the trajectory for elite SaaS companies. For context, Salesforce grew at ~55% CAGR for its first decade. Zoom grew at >100% CAGR for 4 years before its IPO. The metric that matters is sustainability of that CAGR, not just the number itself.
T2D3: The Growth Model for Series A to IPO
T2D3 (Triple, Triple, Double, Double, Double) is the growth model developed by Neeraj Agrawal at Battery Ventures that describes the trajectory of companies from $2M to $100M ARR:
Year 1: $2M ARR. Year 2: $6M (3×). Year 3: $18M (3×). Year 4: $36M (2×). Year 5: $72M (2×). Year 6: $144M (2×).
This isn't a prescription — it's a description of what the best software companies actually did. Not every company needs to hit T2D3 exactly, but understanding where you are relative to this model tells you whether you're tracking toward category leadership or toward a slower, more capital-efficient path.
Doubling Time: The Instinctive Growth Metric
Doubling time answers the question every founder actually wants answered: "How long until I'm twice as big?" Formula: Doubling Time = 70 ÷ Monthly Growth Rate (%). This uses the Rule of 70 approximation.
At 15% MoM growth, you double every 4.7 months. At 10% MoM, you double every 7 months. At 5% MoM, you double every 14 months. The difference between 10% and 15% MoM seems small but compounds into massive valuation differences. At 10% MoM for 2 years, you grow 9.8×. At 15% MoM, you grow 22.6×. Pick your growth rate carefully — the difference is enormous.
Growth rate is not just a metric you report to investors — it's a forcing function for strategic clarity. When you know your exact MoM and understand where you should be on the T2D3 curve, every decision becomes clearer. Use the calculator to get your growth numbers, then plot them against the benchmarks to understand your fundraising position.
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