Monthly Recurring Revenue (MRR): What is it and why does it matter?
What is monthly recurring revenue ("MRR")?
MRR, or Monthly Recurring Revenue, is a financial metric that measures the amount of revenue that a company generates on a recurring basis from its subscription-based products or services over a one-month period. It is calculated by taking the total revenue that a company generates from its recurring revenue streams in a given month and dividing it by the number of customers it has.
Why is MRR important?
MRR is a popular metric in the venture capital (VC) industry because it provides a clear indication of the growth and stability of a company's revenue streams. VCs are typically looking for start-ups that have strong growth potential and are able to generate predictable and recurring revenue. MRR can be a useful indicator of a company's ability to do this, as it reflects the recurring revenue that a company generates from its existing customer base on a monthly basis.
In addition, MRR can be useful for start-ups looking to raise funding, as it provides investors with a clear understanding of the company's revenue streams and growth potential. Start-ups with strong MRR growth are often more attractive to investors, as they may be more likely to generate consistent and predictable returns over the long term.
Alternatively, it is also common to present annual recurring revenue (ARR) to prospective investors. You can read more about ARR here.
Overall, MRR is a valuable metric for start-ups and VCs as it provides insight into the growth and stability of a company's revenue streams, and can be a useful indicator of a company's potential for long-term success.
MRR, or Monthly Recurring Revenue, is a financial metric that measures the amount of revenue that a company generates on a recurring basis from its subscription-based products or services over a one-month period. It is calculated by taking the total revenue that a company generates from its recurring revenue streams in a given month and dividing it by the number of customers it has.
Why is MRR important?
MRR is a popular metric in the venture capital (VC) industry because it provides a clear indication of the growth and stability of a company's revenue streams. VCs are typically looking for start-ups that have strong growth potential and are able to generate predictable and recurring revenue. MRR can be a useful indicator of a company's ability to do this, as it reflects the recurring revenue that a company generates from its existing customer base on a monthly basis.
In addition, MRR can be useful for start-ups looking to raise funding, as it provides investors with a clear understanding of the company's revenue streams and growth potential. Start-ups with strong MRR growth are often more attractive to investors, as they may be more likely to generate consistent and predictable returns over the long term.
Alternatively, it is also common to present annual recurring revenue (ARR) to prospective investors. You can read more about ARR here.
Overall, MRR is a valuable metric for start-ups and VCs as it provides insight into the growth and stability of a company's revenue streams, and can be a useful indicator of a company's potential for long-term success.
