Published on
November 1, 2025
Study: Growth Benchmarks for VC Portfolios 2025
Explore how growth benchmarks are reshaping venture capital strategies in 2025, focusing on sustainable growth and efficient metrics.
In 2025, venture capital (VC) funding is shifting towards fewer, larger investments, making growth benchmarks essential for smarter decisions. Global venture funding reached $115 billion in Q2 2025, up 29% from Q4 2024, but deal volume dropped 29%, highlighting the need for precise metrics. Key areas of focus include:
- AI dominance: 71% of VC funding now goes to AI-driven companies, with a median Series A burn of $5 per $1 of new revenue.
- Efficient growth: Investors prioritize metrics like ARR growth, capital efficiency (Burn Multiple), and customer economics (CAC, LTV, churn) to identify scalable, sustainable companies.
- Sector and stage trends: SaaS, fintech, and healthtech lead growth, while early-stage companies focus on product-market fit and late-stage firms target faster exits.
Top-performing VC funds excel by aligning valuations with market fundamentals and prioritizing sustainable growth. Tools like real-time dashboards and financial advisory services are now critical for tracking KPIs, refining strategies, and maximizing returns.
Key Findings from Recent Growth Benchmark Studies
The Affinity 2025 VC Benchmark Report offers a deep dive into venture capital performance, drawing on data from nearly 3,000 VC firms across 68 countries. This report provides a detailed look at how growth is being measured and offers insights to refine portfolio management strategies.
The study tracked deal volume, network activity, and engagement across multiple fund vintages, with a particular focus on the 2017–2020 vintages, which now have complete performance data. Both public and private market trends were analyzed, covering everything from initial investments to exit outcomes. These findings help paint a clearer picture of how growth metrics are shifting.
One standout data point: median Series A AI companies are spending $5 for every $1 of new revenue, showcasing the capital efficiency challenges in this space.
New Trends in Growth Metrics
The report points to a shift in focus toward efficient growth as the key signal in today’s markets. While "growth-at-any-cost" was once the prevailing strategy, the 2025 benchmarks emphasize sustainable revenue increases, driven by sound unit economics.
AI companies are now commanding 71% of capital deployed in Q2 2025, with quarterly funding surging 145% compared to Q3 2023's $47 billion baseline. Meanwhile, traditional public company valuation multiples have fallen below historical norms. Early-stage companies demonstrating strong capital efficiency continue to secure premium valuations. Another trend is the rise in bootstrapping, with companies delaying institutional funding until they’ve validated their business models. This shift places greater emphasis on firms with proven fundamentals over those chasing rapid scaling.
Industry and Stage-Specific Results
Performance varies significantly across sectors and stages. SaaS, fintech, and healthtech remain standout sectors, delivering consistent growth rates.
Geographically, the Bay Area leads, capturing the largest share of the $115 billion in quarterly deployment. European markets have remained steady, with funding levels consistently in the $13–$17 billion range. Latin America, however, has been highly volatile - Q1 2025 saw $3.5 billion in investments, only to drop 70% to $1.05 billion in Q2. Despite this, average deal sizes in the region have climbed to $4.8 million, far exceeding the historical range of $0.9–$1.7 million.
When looking at specific stages, late-stage companies are seeing faster exits and increased activity in secondary markets, shifting attention to exit readiness and operational efficiency. Early-stage benchmarks, on the other hand, are focusing more on product–market fit and capital efficiency, reflecting the growing importance of solid fundamentals before scaling. These stage-specific trends highlight the evolving strategies that top-performing companies are adopting to stay ahead.
Top Performers vs. Average Performance
The performance gap between top-tier and average funds has widened significantly. For the 2017 vintage, top-performing funds achieved a TVPI of 4.22x, compared to the median of 1.72x, representing a 145% premium. However, median TVPI has seen a decline over time, dropping from 1.38x in 2018 to 1.08x for the 2019–2020 vintages.
| Fund Vintage | Top Quartile TVPI | Median TVPI | Performance Gap |
|---|---|---|---|
| 2017 | 4.22x | 1.72x | 145% premium |
| 2018 | N/A | 1.38x | N/A |
| 2019–2020 | N/A | 1.08x | N/A |
The report identifies several characteristics that set top-performing funds apart. These funds excel in deal quality assessment, prioritizing companies with reasonable valuations that support successful exits. They also deploy capital with discipline, ensuring valuations align with market fundamentals. Additionally, their focus on companies with sustainable growth paths and strong unit economics has been a key factor in their success.
Core Growth Metrics for VC-Backed Companies
As we move into 2025, the focus on efficient growth has become central to how venture capitalists evaluate companies. Beyond revenue, investors now prioritize metrics that demonstrate long-term sustainability. Three key metrics - ARR growth, capital efficiency, and customer economics - serve as the foundation for evaluating the potential of VC-backed companies.
Annual Recurring Revenue (ARR) Growth
For subscription-based and SaaS companies, ARR growth is a critical indicator of scalability. This metric tracks the year-over-year increase in contracted recurring revenue, providing insight into market traction and customer adoption.
- Early-stage companies often aim for ARR growth rates of 80–100% or more annually.
- Later-stage companies with established market fit focus on maintaining growth above 40%.
Strong ARR growth reflects both customer retention and acquisition, which are essential for securing follow-on funding and achieving higher valuations. In tech-driven sectors, ARR growth is particularly scrutinized, as it demonstrates a company’s ability to monetize its technology and scale operations effectively.
However, while ARR growth measures market traction, it’s equally important to assess how efficiently companies convert invested capital into this growth.
Capital Efficiency Metrics
The Burn Multiple has become a go-to metric for evaluating capital efficiency in VC-backed companies. It’s calculated as the net cash burned divided by new ARR, showing how effectively a company turns investment dollars into revenue.
- A Burn Multiple below 1.5x is considered excellent, indicating significant revenue growth relative to cash usage.
- Multiples between 1.5–2.0x are generally acceptable.
- Anything above 2.0x raises concerns about unsustainable growth and poor capital allocation.
In today’s investment climate, where funding is more selective, companies that demonstrate efficient capital use are better positioned to attract follow-on investments. High Burn Multiples often signal the need for operational adjustments to avoid unsustainable cash burn.
While capital efficiency is crucial, customer economics provide another layer of insight into a company’s ability to grow sustainably.
Customer Metrics: CAC, LTV, and Churn
Customer economics are at the heart of sustainable growth. Three core metrics - Customer Acquisition Cost (CAC), Lifetime Value (LTV), and churn rate - offer a detailed view of customer dynamics.
- CAC represents the total cost of acquiring a new customer, including marketing, sales, and overhead expenses.
- LTV estimates the total revenue a customer is expected to generate over their lifetime.
- The LTV:CAC ratio is a key benchmark, with top-performing companies targeting ratios of 3:1 or higher.
Churn rate, which measures the percentage of customers lost over a given period, is another vital metric. Successful SaaS companies typically maintain monthly churn rates below 1–2%. High churn can indicate product or service issues that undermine growth, while low churn combined with efficient customer acquisition supports a scalable business model.
| Metric | Best-in-Class Target | Industry Benchmark | Red Flag Level |
|---|---|---|---|
| LTV:CAC Ratio | 3:1 or higher | 2:1 to 3:1 | Below 2:1 |
| Monthly Churn Rate | Below 1–2% | 1–2% | Above 3% |
| Burn Multiple | Below 1.5x | 1.5–2.0x | Above 2.0x |
These metrics help VCs allocate resources more effectively and fine-tune their portfolio strategies. By combining customer insights with financial performance data, investors can make informed decisions about which companies to prioritize for follow-on investments and strategic guidance.
For portfolio companies, regularly tracking and optimizing these metrics ensures they can benchmark their performance against industry standards and identify improvement areas. Companies excelling in ARR growth, capital efficiency, and customer metrics are often best positioned for sustainable scaling and successful exits, giving them a competitive edge in attracting investor support.
How to Use Growth Benchmarks for Portfolio Management
Growth benchmarks become powerful tools for managing portfolio companies when applied methodically. They help transform raw data into actionable insights, driving better decisions and measurable progress across the board.
KPI Tracking and Reporting
Tracking key performance indicators (KPIs) effectively starts with integrating real-time data to eliminate delays and reduce errors. Many top venture capital (VC) firms rely on cloud-based dashboards that automatically compile metrics like ARR growth, capital efficiency, and customer data from various portfolio companies into one cohesive view. This streamlined approach ensures portfolio managers have timely and accurate insights.
To keep performance on track, integrate finance and revenue operations. Automated alerts can flag any deviations from benchmarks, allowing managers to act quickly and address potential issues before they escalate.
However, the quality of your data is critical. Standardizing data collection processes across all portfolio companies’ financial, sales, marketing, and operational systems ensures consistency and reliability. Without this standardization, comparing benchmarks becomes ineffective, leading to poor investment decisions.
Continuous monitoring plays a vital role in spotting trends early and providing targeted support. By leveraging these real-time insights, you can set precise growth targets that align with broader portfolio goals.
Setting Growth Targets
Setting realistic growth targets involves analyzing benchmark studies alongside company-specific factors like product maturity, market trends, and competitive positioning. For example, if the median ARR growth rate for Series B SaaS companies is 40% year-over-year, use this as a baseline while adjusting for each company’s unique circumstances.
To make informed decisions, examine 12–18 months of historical data to identify patterns and trends. Comparing sector-specific benchmarks is equally important. For instance, a healthcare technology company should be evaluated against other healthcare firms rather than general SaaS benchmarks, as factors like patient acquisition costs and regulatory hurdles create unique growth dynamics.
Once benchmarks are established, break them down into actionable goals for each department. Revenue targets should align with marketing budgets, customer success efforts, and operational capacity to ensure all teams are working toward the same objectives.
Scenario planning enhances this process by preparing for various outcomes. Develop base case, optimistic, and conservative scenarios to account for uncertainties like market shifts, competitive pressures, or execution risks. This approach helps companies stay focused on achievable goals while remaining adaptable to changing conditions.
Finally, align individual company targets with overall portfolio benchmarks to maintain a cohesive strategy across all investments.
Adjusting to Market Changes
Even with well-set targets, market conditions can change rapidly, requiring ongoing adjustments. Regularly reviewing macroeconomic trends, sector performance, and company-specific developments ensures that targets stay relevant as circumstances shift.
Stress testing can highlight vulnerabilities and opportunities within the portfolio. For example, sudden increases in AI investment or shifts in exit markets may require a recalibration of strategies.
One leading U.S. VC firm demonstrated the value of this approach by conducting quarterly reviews. They compared each portfolio company’s performance against top-quartile benchmarks, resulting in a 15% average growth rate increase across their portfolio within a year.
Maintaining open communication with founders is equally important. When adjustments are needed, close collaboration helps align on revised targets and strategic priorities, fostering trust and shared commitment to success.
Flexible financial models are another key tool. These models allow companies to quickly analyze different growth scenarios, funding needs, and resource allocation strategies. Companies with strong financial planning capabilities can pivot more effectively when market conditions demand it.
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Using Financial Advisory Services for Growth Benchmarking
Expanding on the importance of tracking key performance indicators (KPIs), financial advisory services are now indispensable for turning raw data into actionable strategies. For growth-stage companies, having access to industry benchmarks is just the starting point. The real edge lies in working with specialized financial advisors who can interpret this data and implement systems that help businesses not only meet but surpass these benchmarks.
Role of Advanced Technology and Data Engineering
The backbone of effective growth benchmarking is high-quality, well-integrated data. Advanced technology platforms allow companies to automate financial reporting, merge data from multiple sources, and use real-time analytics to compare performance against industry standards. These tools fundamentally change how businesses evaluate their progress relative to venture capital (VC) portfolio benchmarks.
Data engineering plays a critical role in this process by creating efficient ETL pipelines and dashboards that consolidate financial, sales, marketing, and operational data. This ensures that benchmarks are based on clean, organized, and fully integrated data.
Dynamic dashboards take benchmarking to the next level. For instance, a SaaS company can leverage these tools to monitor annual recurring revenue (ARR) growth and churn rates in real time, comparing them to similar companies at the same growth stage. This immediate insight helps identify performance gaps long before traditional quarterly reports.
Moreover, these technological advancements improve forecasting. By using advanced data engineering, companies can develop financial models that update automatically, providing more accurate cash flow predictions and strategic insights. This level of precision is crucial when presenting financial projections to investors during fundraising.
Benefits of Specialized Advisory Services
Specialized financial advisory services provide essential expertise for growth-stage companies:
- Fractional CFO Services: These experts bring executive-level financial guidance, particularly for VC-backed companies, ensuring key metrics align with investor expectations.
- Bookkeeping Services: Accurate and timely financial records are critical for meaningful benchmark comparisons. Clean data forms the foundation of effective financial analysis.
- Financial Planning and Analysis (FP&A): FP&A services help businesses create detailed financial models and scenario plans that align with both industry benchmarks and company-specific goals. This ensures growth targets are realistic and grounded in market data.
- M&A Advisory: As companies prepare for acquisitions or exits, advisory teams help align them with top-tier benchmarks, identifying areas for improvement that can significantly boost valuation multiples.
These services collectively enhance financial discipline, build investor trust, and prepare companies for scaling or exit opportunities. Businesses that leverage advisory services often achieve better capital efficiency and more predictable growth compared to those handling these functions internally.
Phoenix Strategy Group's Expertise
Phoenix Strategy Group (PSG) specializes in helping growth-stage companies not only meet but exceed VC benchmarks through tailored financial advisory services. Their unique approach combines cutting-edge technology with deep industry knowledge to deliver measurable outcomes.
PSG’s data engineering capabilities enable clients to deploy advanced KPI tracking systems, offering real-time insights into performance relative to industry standards. As one client, Michael Mancuso, CIO of New Law Business Model, remarked:
"Hire PSG if you want to make your life easier and have accurate data."
Their fractional CFO services have also proven transformative. David Darmstandler, Co-CEO of DataPath, shared:
"As our fractional CFO, they accomplished more in six months than our last two full-time CFOs combined. If you're looking for unparalleled financial strategy and integration, hiring PSG is one of the best decisions you can make."
Phoenix Strategy Group operates on the belief that:
"When you put the Right Data in front of an Empowered Team, they get better."
- Phoenix Strategy Group
This philosophy, paired with their integrated service model, has helped businesses achieve premium valuations and successful exits. In today’s market, where VC investments are heavily concentrated in IT and healthcare, PSG’s expertise in financial management and strategic positioning is more valuable than ever.
Conclusion: The Value of Growth Benchmarks in 2025
By 2025, growth benchmarks have transformed how venture capital (VC) portfolios are managed, replacing guesswork with precise, data-driven strategies. These benchmarks go beyond simply tracking performance - they empower firms to make proactive adjustments, reshaping how capital is allocated in a funding landscape that’s more selective than ever.
The focus on efficient and disciplined growth has made benchmarks indispensable. For example, standout vintage years like 2022 delivered double-digit returns across major sectors, while weaker years, such as 2018, struggled to meet even basic performance thresholds. This contrast underscores the importance of consistent benchmark tracking in identifying top-performing portfolios and weeding out underachievers.
Technology has played a major role in advancing benchmarking processes. Tools like real-time analytics, automated dashboards, and predictive models allow VC firms to make faster, smarter decisions. But technology alone isn’t enough. Specialized advisory services, such as those offered by Phoenix Strategy Group, help turn raw data into actionable plans. With experience supporting over 240 portfolio companies and facilitating more than $200 million in fundraising over the past year, Phoenix Strategy Group demonstrates how expertise can amplify the impact of benchmarking. Their integrated approach to finance and revenue operations ensures that benchmarks are not just numbers but a foundation for strategic growth.
Portfolios that embrace growth benchmarks consistently deliver stronger long-term returns. These benchmarks provide a roadmap for making informed decisions, adapting strategies in real time, and maximizing investor outcomes. As the market grows increasingly competitive, firms that excel in benchmark-driven management will seize the best opportunities and achieve the highest levels of success.
FAQs
What are the key growth benchmarks for VC-backed companies in 2025, and why do they matter for investors?
As we move into 2025, growth benchmarks for venture capital (VC)-backed companies are evolving, shaped by changing market dynamics, new technologies, and shifting investor priorities. These benchmarks serve as a key tool for assessing company performance, spotting growth opportunities, and making strategic decisions about scaling and funding.
For investors, these benchmarks are more than just numbers - they provide a structured way to determine whether a portfolio company is on the right path toward sustainable growth. By analyzing these metrics, investors can make smarter decisions about resource allocation, manage risks effectively, and aim for higher returns in an increasingly competitive landscape.
What growth metrics should VC-backed companies prioritize to prove efficiency and attract investors?
VC-backed companies should zero in on metrics that emphasize steady growth and efficient operations. Here are some key areas to keep an eye on:
- Revenue growth rate: This reflects how well the business is scaling. Investors want to see consistent and meaningful increases in top-line revenue over time. It’s a clear indicator of market demand and execution.
- Customer acquisition cost (CAC) vs. lifetime value (LTV): A solid LTV-to-CAC ratio - typically 3:1 or better - shows that the company is acquiring customers efficiently and setting the stage for long-term profitability.
- Burn rate and runway: Keeping the burn rate under control and ensuring a cash runway of 12–18 months gives investors confidence in the company’s financial health and ability to weather challenges.
- Gross margins: Strong gross margins signal the potential for significant profitability as the business grows. It’s a key metric that highlights operational efficiency and pricing power.
By focusing on these metrics, companies can not only attract investor interest but also position themselves for long-term growth and scalability.
How do financial advisory services support VC-backed companies in achieving growth benchmarks?
Financial advisory services are essential for VC-backed companies aiming to hit their growth targets. They offer specialized support in areas such as bookkeeping, fractional CFO services, financial planning and analysis (FP&A), and data engineering. These services provide companies with the financial clarity and strategic direction needed to scale, attract funding, and plan for successful exits.
With the help of cutting-edge technology, proprietary data, and industry expertise, financial advisors assist businesses in tracking performance, uncovering growth opportunities, and meeting investor expectations. This groundwork helps build a strong platform for sustainable growth and long-term success.
