The Unit Economics Lie: Why Indian Founders Measure the Wrong Numbers
Your CAC/LTV looks fine. Your business is dying. Here's the measurement problem killing Indian startups that nobody's calling out.
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“Most Indian founders calculate CAC using total marketing spend divided by total new users — a number that flatters the business and misleads every downstream decision. Real CAC includes sales team cost, founder time, referral incentives, and onboarding support. The gap between reported and real CAC is typically 2–4x.”
“LTV calculations in Indian B2C almost universally ignore churn's compounding effect. A business with 8% monthly churn has an effective customer lifetime of 12 months, not the 36-month horizon most founders use. Every decision downstream of that assumption is wrong.”
“The metric Indian founders almost never track — and that VCs increasingly demand — is payback period in months. A CAC/LTV ratio of 1:4 looks strong. If payback is 28 months, the business is a cash-flow trap that requires continuous external capital to survive.”
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Amit Tyagi
Founder, AletheiaAI & GP, Fitoor Capital
Veteran of India's startup ecosystem. Writing about fundraising, investor psychology, and what it takes to build fundable startups in India.
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