Every concept in this track has a number behind it, and founders and investors run the same handful of models — on whiteboards, in pitch meetings, on the backs of envelopes — to decide whether a business is healthy and whether it is a venture-scale bet. This module is different from the rest: it is hands-on. Five interactive calculators let you plug in your own figures and watch the levers move — unit economics, burn and runway, retention, dilution across rounds, and the fund-returner math at the heart of the power law. Read the short explanation, then play with the numbers until the intuition is yours. By the end you should be able to look at any startup and quickly ask the right quantitative questions — from either side of the table.
This track has given you the concepts — the power law, the instruments, valuation, dilution, the fund as an institution. This module gives you the arithmetic that sits underneath them. None of these models is complicated; their power is that they compress a business into a few numbers that reveal whether it works. A founder uses them to steer the company and to know which lever matters most this quarter; an investor uses the very same models to size up a startup in minutes and to sanity-check a founder's claims. Learning to run them in your head is one of the most practical skills in venture.
Each section below pairs a brief explanation — the formula and the rule of thumb that experienced operators carry around — with a live calculator. The defaults describe a plausible early-stage software company; change any input and every output updates instantly, along with a plain-language verdict. Treat them as intuition machines: the goal is not the exact number but a feel for how the pieces move together — how a small change in churn swings lifetime value, how raising at a higher price preserves ownership, how a single exit can return an entire fund.
These are simplified back-of-envelope models built for intuition, not substitutes for a full financial model or for judgment. Real businesses have segments, seasonality, changing margins, and messy cap tables; a real diligence process digs far deeper. But the simplified versions are exactly what gets run in the room — the quick mental math that frames the conversation before anyone opens a spreadsheet. Master these, and the detailed models become easier to read, because you will know what they are really trying to say.
Unit economics ask the most fundamental question about any business: does each customer make or lose you money? Three numbers tell the story. CAC (customer acquisition cost) is what you spend to win one customer. LTV (lifetime value) is the gross profit that customer generates over their whole relationship with you. And the payback period is how many months of that customer's gross profit it takes to earn the CAC back. The headline metric investors reach for first is the LTV:CAC ratio — and the canonical rule of thumb is that it should be at least 3×, with a CAC payback under roughly twelve months.
The formulas are simple. A customer's monthly gross profit is their revenue times your gross margin. If they churn at some monthly rate, their expected lifetime is 1 / churn months. So LTV = ARPU × gross margin × (1 / churn), and payback = CAC / monthly gross profit. Notice the enormous leverage of retention: halve your churn and you double every customer's lifetime and lifetime value, without spending a cent more on acquisition. Try it in the calculator.
If unit economics decide whether a startup works, burn and runway decide whether it survives long enough to find out. Net burn is how much cash you lose each month — your costs minus your revenue. Runway is how many months of life that leaves you: runway = cash / net burn. This single number governs the most important clock in any startup, because raising money takes time and you never want to be negotiating with the tank near empty.
Two ideas frame the verdict. A company whose revenue covers its costs is "default alive" — it is not burning, controls its own destiny, and can raise from strength rather than need. A company that is burning must watch the clock: the practical rule is that most rounds are raised with roughly twelve to eighteen months of runway remaining, because fundraising itself can take three to six months and you want margin for error. Under six months is an emergency. Adjust the inputs and watch how cutting costs or adding revenue buys months of life.
For recurring-revenue businesses, retention is the quiet metric that decides everything, and the picture is best captured by net revenue retention (NRR) — what happens to the revenue from your existing customers over a period, before adding any new ones. Start with last period's revenue from a cohort, subtract what churned away, add what expanded (upgrades, seat growth, usage), and express the result as a percentage of where you started: NRR = (start + expansion − churn) / start.
The magic number is 100%. Below it, your existing base shrinks each month — the "leaky bucket," where you must keep pouring in new customers just to stay level. At or above 100%, expansion offsets churn and the base holds or grows on its own; above 120% is world-class, meaning your revenue would compound even if you never signed another customer. This is why investors prize NRR so highly: a high figure means growth is durable rather than a treadmill. Watch how a few points of churn or expansion swing the whole trajectory.
Every time a startup raises a priced round, it sells new shares, and everyone who already owns the company is diluted — their slice of the pie gets smaller, even as the pie (one hopes) gets much bigger. The arithmetic of a single round is: post-money = pre-money + amount raised, the new investors own raised / post-money of the company, and every existing holder's stake is multiplied by pre-money / post-money. The crucial insight is that dilution compounds across rounds — founders who start at 100% commonly hold a fraction of that after several raises.
This is why the price you raise at matters so much: raising the same dollars at a higher pre-money valuation sells a smaller slice, preserving ownership. It is also why founders weigh raising less (less dilution now) against raising more (more runway and ambition). Model a three-round journey below — set each round's raise and pre-money valuation (in millions) and watch founder ownership march down. Set a round's raise to zero to skip it.
| Round | Pre | Raise | Post | Investor % | Founders % |
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The last tool flips to the investor's chair and makes the power law of Module 10 concrete. A venture fund must return several times the capital it raised, and because most investments fail or merely break even, the fund relies on a tiny number of enormous winners — ideally, investments capable of returning the entire fund on their own. The math that governs this is unforgiving and simple: an exit returns the fund only if exit value × ownership ≥ fund size. Rearranged, to return a fund from one company you need an exit of fund size / ownership.
This is why ownership percentage and exit scale matter so much to VCs, and why they pass on good companies that simply cannot get big enough. A $100M fund holding 10% of a company needs that company to exit at $1 billion just to return the fund once — and a fund needs to do that several times over. Use the calculator to see what any given ownership stake demands of an exit, and whether a hoped-for outcome clears the bar.
These five models are not independent; they interlock into the two views that run through this entire track. The founder's operating view reads them as a connected dashboard: unit economics show whether each customer is profitable, retention shows whether that profit compounds or leaks, and burn and runway show how long you have to prove it before you must raise again — and raising means dilution, the cost of buying that time. Strong unit economics and high retention let you raise at a higher valuation, which means less dilution for the same runway. Every metric pulls on the others.
The investor's screening view reads the same numbers in reverse, as a filter. Are the unit economics real (LTV:CAC, payback)? Is growth durable or a treadmill (NRR)? Is the burn disciplined and the runway sufficient (or is this a forced, weak raise)? And above all, can this company become big enough, at an ownership I can hold, to return my fund? A founder who has internalized that last question builds a sharper company and a sharper pitch; an investor who reads the operating metrics clearly sees through optimism to the underlying engine. The arithmetic is the common language both sides speak.
Unit economics ask whether each customer pays off; retention asks whether that revenue compounds or leaks; burn and runway ask how long you can survive to find out; dilution asks what raising the money costs in ownership; and the fund-returner asks whether the whole thing can get big enough to matter to an investor. Founders run these to steer and to raise from strength; investors run them to screen and to size the bet. None is complicated, and that is the point — the people who move fastest in venture are the ones who can run this arithmetic in their heads and ask the right question first. Now you can too.
Six questions on the toolkit — unit economics, burn and runway, net revenue retention, dilution, the fund-returner math, and how the metrics fit together. The questions test the intuition the calculators are built to give.